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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

Managerial Accounting: The Cornerstone of Business Decision-Making
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter3: Cost Behavior And Cost Forecasting
Section: Chapter Questions
Problem 54E: Income Statements under Absorption and Variable Costing In the coming year, Kalling Company expects...
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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
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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