ACCT-701: Winter 2020 Section 008 Alfredo Panceron

Assignment #1 instructions | help

 
 2. value:
70.00 points

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

Total Per Unit

Sales (36,000 units) $180,000 $5.00
Variable expenses 72,000 2.00
Contribution margin 108,000 $3.00
Fixed expenses 43,000
Net operating income $ 65,000

Required:
Prepare a new contribution format income statement under each of the following conditions (consider each case independently): (Do not
round intermediate calculations. Round your "Per unit" answers to 2 decimal places.)

1. The number of units sold increases by 15%.

Miller Company
Contribution Income Statement
Total Per Unit
Sales $ 207,000 $ 5.00
Variable expenses 82,800 2.00
Contribution margin 124,200 $ 3.00

Fixed expenses 43,000

Net operating income $ 81,200

2. The selling price decreases by $1.40 per unit, and the number of units sold increases by 21%.
 Miller Company
Contribution Income Statement
Total Per Unit
Sales $ 156,816 $ 3.60
Variable expenses 87,120 2.00
Contribution margin 69,696 $ 1.60
Fixed expenses 43,000
Net operating income $ 26,696

3. The selling price increases by $1.40 per unit, fixed expenses increase by $8,000, and the number of units sold decreases by 7%.

Miller Company
Contribution Income Statement
Total Per Unit
Sales $ 214,272 $ 6.40
Variable expenses 66,960 2.00
Contribution margin 147,312 $ 4.40
Fixed expenses 51,000
Net operating income $ 96,312

4. The selling price increases by 20%, variable expenses increase by 20 cents per unit, and the number of units sold decreases by 12%.

Miller Company
Contribution Income Statement
Total Per Unit
Sales $ 190,080 $ 6.00
Variable expenses 69,696 2.20
Contribution margin 120,384 $ 3.80
Fixed expenses 43,000

Net operating income $ 77,384

rev: 06_08_2016_QC_CS-53206

References eBook & Resources

 Financial statements Learning Objective: 03-01
Explain how changes in
activity affect contribution
margin and net operating
income.

Difficulty: 1 Easy Learning Objective: 03-04

Show the effects on net
operating income of changes
in variable costs, fixed costs,
selling price, and volume.

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