1. Assume the sales volume increases by 4,896 units: a. What is the revised net operating income? b. What is the percent increase in unit sales? c. Using the most recent month's degree of operating leverage, what is the percent increase in net operating income? 2. What is the revised net operating income if the selling price decreases by $1.30 per unit and the number of units sold increases by 22%? 3. What is the revised net operating income if the selling price increases by $1.30 per unit, fixed expenses increase by $8,000, 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 30 cents per unit, and the number of units sold decreases by 11%?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question

1

Miller Company's contribution format income statement for the most recent month is shown below:
Per Unit
$9.00
5.40
$ 3.60
Sales (28,800 units)
Variable expenses
Contribution margin
Fixed expenses
Net operating income
Total
$ 259,200
155,520
103,680
60,480
$ 43,200
Required:
(Consider each of the four requirements independently):
1. Assume the sales volume increases by 4,896 units:
a. What is the revised net operating income?
b. What is the percent increase in unit sales?
c. Using the most recent month's degree of operating leverage, what is the percent increase in net operating income?
2. What is the revised net operating income if the selling price decreases by $1.30 per unit and the number of units sold increases by
22%?
3. What is the revised net operating income if the selling price increases by $1.30 per unit, fixed expenses increase by $8,000, 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 30 cents per
unit, and the number of units sold decreases by 11%?
1a. Net operating income
1b. Percent increase in unit sales
1c. Percent increase in net operating income
2. Net operating income (loss)
3. Net operating income
4. Net operating income
%
%
Transcribed Image Text:Miller Company's contribution format income statement for the most recent month is shown below: Per Unit $9.00 5.40 $ 3.60 Sales (28,800 units) Variable expenses Contribution margin Fixed expenses Net operating income Total $ 259,200 155,520 103,680 60,480 $ 43,200 Required: (Consider each of the four requirements independently): 1. Assume the sales volume increases by 4,896 units: a. What is the revised net operating income? b. What is the percent increase in unit sales? c. Using the most recent month's degree of operating leverage, what is the percent increase in net operating income? 2. What is the revised net operating income if the selling price decreases by $1.30 per unit and the number of units sold increases by 22%? 3. What is the revised net operating income if the selling price increases by $1.30 per unit, fixed expenses increase by $8,000, 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 30 cents per unit, and the number of units sold decreases by 11%? 1a. Net operating income 1b. Percent increase in unit sales 1c. Percent increase in net operating income 2. Net operating income (loss) 3. Net operating income 4. Net operating income % %
Expert Solution
steps

Step by step

Solved in 6 steps

Blurred answer
Knowledge Booster
Income Statement Analysis
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education