Question

Miller Company’s contribution format income statement for the most recent month is shown below:

	Total			Per Unit
Sales (34,000 units)	$	170,000		$	5.00
Variable expenses		68,000			2.00
Contribution margin		102,000		$	3.00
Fixed expenses		48,000
Net operating income	$	54,000

Required:

(Consider each case independently):

1. What is the revised net operating income if unit sales increase by 13%?

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 24%?

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 4%?

4. What is the revised net operating income if the selling price per unit increases by 10%, variable expenses increase by 40 cents per unit, and the number of units sold decreases by 6%?

Answer 1