Miller Company’s contribution format income statement for the most recent month is shown below: TotalPer UnitSales (25,200 units)$ 226,800$ 9.00Variable expenses136,0805.40Contribution margin90,720$ 3.60Fixed expenses52,920 Net operating income$ 37,800 Required:(Consider each of the four requirements independently):Assume the sales volume increases by 4,032 units:What is the revised net operating income?What is the percent increase in unit sales?Using the most recent month’s degree of operating leverage, what is the percent increase in net operating income?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%?What is the revised net operating income if the selling price increases by $1.20 per unit, fixed expenses increase by $10,000, and the number of units sold decreases by 8%?What is the revised net operating income if the selling price per unit increases by 20%, variable expenses increase by 30 cents per unit, and the number of units sold decreases by 12%?

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Answered: Miller Company’s contribution format…

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter7: Variable Costing For Management analysis

Section: Chapter Questions

Problem 9E: The following data were adapted from a recent income statement of Caterpillar Inc. (CAT) for the...

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	Total	Per Unit
Sales (25,200 units)	$ 226,800	$ 9.00
Variable expenses	136,080	5.40
Contribution margin	90,720	$ 3.60
Fixed expenses	52,920
Net operating income	$ 37,800

Required:

(Consider each of the four requirements independently):

Assume the sales volume increases by 4,032 units:
1. What is the revised net operating income?
2. What is the percent increase in unit sales?
3. Using the most recent month’s degree of operating leverage, what is the percent increase in net operating income?
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%?
What is the revised net operating income if the selling price increases by $1.20 per unit, fixed expenses increase by $10,000, and the number of units sold decreases by 8%?
What is the revised net operating income if the selling price per unit increases by 20%, variable expenses increase by 30 cents per unit, and the number of units sold decreases by 12%?

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What is the revised net operating income if the selling price per unit increases by 20%, variable expenses increase by 30 cents per unit, and the number of units sold decreases by 12%?

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