Miller Company's contribution format income statement for the most recent month is shown below: Sales (26,400 units) Variable expenses Total $ 237,600 142,560 Contribution margin 95,040 Per Unit $ 9.00 5.40 $ 3.60 Fixed expenses 55,440 Net operating income $ 39,600 Required: (Consider each of the four requirements independently): 1. Assume the sales volume increases by 4,488 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 23%? 3. What is the revised net operating income if the selling price increases by $1.20 per unit, fixed expenses increase by $6,000, 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 5%? 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
Miller Company's contribution format income statement for the most recent month is shown below: Sales (26,400 units) Variable expenses Total $ 237,600 142,560 Contribution margin 95,040 Per Unit $ 9.00 5.40 $ 3.60 Fixed expenses 55,440 Net operating income $ 39,600 Required: (Consider each of the four requirements independently): 1. Assume the sales volume increases by 4,488 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 23%? 3. What is the revised net operating income if the selling price increases by $1.20 per unit, fixed expenses increase by $6,000, 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 5%? 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
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Miller Company's contribution format income statement for the most recent month is shown below:
Sales (26,400 units)
Variable expenses
Total
$ 237,600
142,560
Contribution margin
95,040
Per Unit
$ 9.00
5.40
$ 3.60
Fixed expenses
55,440
Net operating income
$ 39,600
Required:
(Consider each of the four requirements independently):
1. Assume the sales volume increases by 4,488 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
23%?
3. What is the revised net operating income if the selling price increases by $1.20 per unit, fixed expenses increase by $6,000, 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 5%?
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
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