Miller Company's contribution format income statement for the most recent month is shown below: Sales (28,200 units) Variable expenses Total $ 169,200 101,520 Contribution margin 67,680 Per Unit $ 6.00 3.60 $ 2.40 Fixed expenses 39,480 Net operating income $ 28,200 Required: (Consider each of the four requirements independently): 1. Assume the sales volume increases by 5,076 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 17%? 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 6%? 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 13%?
Miller Company's contribution format income statement for the most recent month is shown below: Sales (28,200 units) Variable expenses Total $ 169,200 101,520 Contribution margin 67,680 Per Unit $ 6.00 3.60 $ 2.40 Fixed expenses 39,480 Net operating income $ 28,200 Required: (Consider each of the four requirements independently): 1. Assume the sales volume increases by 5,076 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 17%? 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 6%? 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 13%?
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 (28,200 units)
Variable expenses
Total
$ 169,200
101, 520
67,680
Per Unit
$ 6.00
3.60
$ 2.40
Contribution margin
Fixed expenses
39,480
Net operating income
$ 28, 200
Required:
(Consider each of the four requirements independently):
1. Assume the sales volume increases by 5,076 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
17%?
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 6%?
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 13% ?
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