Miller Company's contribution format income statement for the most recent month is shown below: Per Unit $ 6.00 3.60 $ 2.40 Sales (30,000 units) Variable expenses Contribution margin Fixed expenses Net operating income. Total $ 180,000 108,000 72,000 42,000 $ 30,000 Required: (Consider each of the four requirements independently): 1. Assume the sales volume increases by 4,800 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 $1.20 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 $1.20 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 30 cents per unit and the number of units sold decreases by 12%?

Managerial Accounting: The Cornerstone of Business Decision-Making
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Chapter3: Cost Behavior And Cost Forecasting
Section: Chapter Questions
Problem 54E: Income Statements under Absorption and Variable Costing In the coming year, Kalling Company expects...
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Miller Company's contribution format income statement for the most recent month is shown below:
Per Unit
$ 6.00
3.60
$ 2.40
Sales (30,000 units)
Variable expenses
Contribution margin
Fixed expenses
Net operating income
Total
$ 180,000
108,000
72,000
42,000
$ 30,000
Required:
(Consider each of the four requirements independently):
1. Assume the sales volume increases by 4,800 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 $1.20 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 $1.20 per unit, fixed expenses increase by $7,000, and the
number of units sold decreases by 7%?
1a. Net operating income
1b. Percent increase in unit sales
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 12%?
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 $ 6.00 3.60 $ 2.40 Sales (30,000 units) Variable expenses Contribution margin Fixed expenses Net operating income Total $ 180,000 108,000 72,000 42,000 $ 30,000 Required: (Consider each of the four requirements independently): 1. Assume the sales volume increases by 4,800 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 $1.20 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 $1.20 per unit, fixed expenses increase by $7,000, and the number of units sold decreases by 7%? 1a. Net operating income 1b. Percent increase in unit sales 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 12%? 1c. Percent increase in net operating income 2. Net operating income (loss) 3. Net operating income 4. Net operating income % %
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