Miller Company's contribution format income statement for the most recent month is shown below: Total Per Unit Sales (22,800 units) Variable expenses $ 136,800 82,080 Contribution margin 54,720 $ 6.00 3.60 $ 2.40 Fixed expenses 31,920 Net operating income $ 22,800 Required: (Consider each of the four requirements independently): 1. Assume the sales volume increases by 3,648 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 16%? 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 6%? 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 9%? 1a. Net operating income $ 31,555 1b. Percent increase in unit sales 16 % 1c. Percent increase in net operating income 38 % 2. Net operating income (loss) $ (5,472) 3. Net operating income $ 41,522 4. Net operating income
Miller Company's contribution format income statement for the most recent month is shown below: Total Per Unit Sales (22,800 units) Variable expenses $ 136,800 82,080 Contribution margin 54,720 $ 6.00 3.60 $ 2.40 Fixed expenses 31,920 Net operating income $ 22,800 Required: (Consider each of the four requirements independently): 1. Assume the sales volume increases by 3,648 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 16%? 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 6%? 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 9%? 1a. Net operating income $ 31,555 1b. Percent increase in unit sales 16 % 1c. Percent increase in net operating income 38 % 2. Net operating income (loss) $ (5,472) 3. Net operating income $ 41,522 4. Net operating income
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Gadubhai
Transcribed Image Text:Miller Company's contribution format income statement for the most recent month is shown below:
Total
Per Unit
Sales (22,800 units)
Variable expenses
$ 136,800
82,080
Contribution margin
54,720
$ 6.00
3.60
$ 2.40
Fixed expenses
31,920
Net operating income
$ 22,800
Required:
(Consider each of the four requirements independently):
1. Assume the sales volume increases by 3,648 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
16%?
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 6%?
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 9%?
1a. Net operating income
$
31,555
1b. Percent increase in unit sales
16 %
1c. Percent increase in net operating income
38 %
2. Net operating income (loss)
$
(5,472)
3. Net operating income
$
41,522
4. Net operating income
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