Miller Company's contribution format income statement for the most recent month is shown below: Per Unit $9.00 5.40 $ 3.60 Sales (25,800 units) Variable expenses Contribution margin Fixed expenses Net operating income Total $ 232, 200 139,320 92,880 54,180 $ 38,700 Required: (Consider each of the four requirements independently): 1. Assume the sales volume increases by 4,386 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 $1.40 per unit and the number of units sold increases by 15%? 3. What is the revised net operating income if the selling price increases by $1.40 per unit, fixed expenses increase by $8,000, and the number of units sold decreases by 4%? 4. What is the revised net operating income if the selling price per unit increases by 10%, variable expenses increase by 20 cents per unit, and the number of units sold decreases by 10%?
Miller Company's contribution format income statement for the most recent month is shown below: Per Unit $9.00 5.40 $ 3.60 Sales (25,800 units) Variable expenses Contribution margin Fixed expenses Net operating income Total $ 232, 200 139,320 92,880 54,180 $ 38,700 Required: (Consider each of the four requirements independently): 1. Assume the sales volume increases by 4,386 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 $1.40 per unit and the number of units sold increases by 15%? 3. What is the revised net operating income if the selling price increases by $1.40 per unit, fixed expenses increase by $8,000, and the number of units sold decreases by 4%? 4. What is the revised net operating income if the selling price per unit increases by 10%, variable expenses increase by 20 cents per unit, and the number of units sold decreases by 10%?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Rahul
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 (25,800 units)
Variable expenses
Contribution margin
Fixed expenses
Net operating income
Total
$ 232, 200
139,320
92,880
54,180
$ 38,700
Required:
(Consider each of the four requirements independently):
1. Assume the sales volume increases by 4,386 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 $1.40 per unit and the number of units sold increases by
15%?
3. What is the revised net operating income if the selling price increases by $1.40 per unit, fixed expenses increase by $8,000, and the
number of units sold decreases by 4%?
4. What is the revised net operating income if the selling price per unit increases by 10%, variable expenses increase by 20 cents per
unit, and the number of units sold decreases by 10%?
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
$
54,490
17 %
41 %
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Step 1: Introduction to CVP Analysis
VIEWStep 2: Calculation of degree of operating leverage
VIEWStep 3: Calculation of revised net operating income
VIEWStep 4: Calculation of %increase in sales
VIEWStep 5: Calcuation of %increase in net operating income
VIEWStep 6: Calculation of revised net operating income if selling price decreases by $1.40
VIEWStep 7: Calculation of revised net operating income if if selling price increases by $1.40
VIEWStep 8: Calculation of revised net operating income if if selling price increases by 10%
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