Question

Miller Company’s contribution format income statement for the most recent month is shown below:

	Total			Per Unit
Sales (42,000 units)	$	294,000		$	7.00
Variable expenses		168,000			4.00
Contribution margin		126,000		$	3.00
Fixed expenses		40,000
Net operating income	$	86,000

Required:

(Consider each case independently):

1. What is the revised net operating income if unit sales increase by 14%?

2. What is the revised net operating income if the selling price decreases by $1.20 per unit and the number of units sold increases by 20%?

3. What is the revised net operating income if the selling price increases by $1.20 per unit, fixed expenses increase by $7,000, and the number of units sold decreases by 7%?

4. What is the revised net operating income if the selling price per unit increases by 20%, variable expenses increase by 20 cents per unit, and the number of units sold decreases by 9%?

Answer 1