Question

# Exercise 5-13 Changes in Selling Price, Sales Volume, Variable Cost per Unit, and Total Fixed Costs...

Exercise 5-13 Changes in Selling Price, Sales Volume, Variable Cost per Unit, and Total Fixed Costs [LO5-1, LO5-4] Miller Company’s contribution format income statement for the most recent month is shown below: Total Per Unit Sales (31,000 units) \$ 248,000 \$ 8.00 Variable expenses 155,000 5.00 Contribution margin 93,000 \$ 3.00 Fixed expenses 42,000 Net operating income \$ 51,000 Required: (Consider each case independently): 1. What is the revised net operating income if unit sales increase by 10%? 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 20%? 3. What is the revised net operating income if the selling price increases by \$1.20 per unit, fixed expenses increase by \$9,000, 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 10%, variable expenses increase by 30 cents per unit, and the number of units sold decreases by 10%?

 1. Net operating income 2. Net operating income 3. Net operating income 4. Net operating income

 1 Revised unit sales(31000*110%) 34,100 Sales(34500) 2,72,800 8 Variable cost 1,72,500 5 Contribution 1,00,300 3 Fixed expenses 42,000 Net operating income 58,300 2 Revised unit sales(31000*120%) 37,200 Revised Selling Price(8-1.2) 6.80 Sales(37200) 2,52,960 6.80 Variable cost 1,86,000 5 Contribution 66,960 1.80 Fixed expenses 42,000 Net operating income 24,960 3 Revised unit sales(31000*93%) 28,830 Revised Selling Price(8 + 1.2) 9.20 Fixed expenses(42000+9000) 51,000 Sales(28800) 2,65,236 9.20 Variable cost 1,44,150 5 Contribution 1,21,086 4.20 Fixed expenses 51,000 Net operating income 70,086 4 Revised unit sales(31000*90%) 27,900 Revised Selling Price(8 +0.8) 8.08 Variable expenses(5*130%) 6.50 Sales(28800) 2,25,432 8.08 Variable cost 1,81,350 6.50 Contribution 44,082 1.58 Fixed expenses 42,000 Net operating income 2,082

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