Exercise 5-13 Changes in Selling Price, Sales Volume, VariableCost per Unit, and Total Fixed...

Free

60.1K

Verified Solution

Question

Accounting

Exercise 5-13 Changes in Selling Price, Sales Volume, VariableCost per Unit, and Total Fixed Costs [LO5-1, LO5-4]
Miller Company’s contribution format income statement for themost recent month is shown below:
Total Per Unit
Sales (36,000units) $ 252,000 $ 7.00
Variable expenses 144,000 4.00
Contribution margin 108,000 $ 3.00
Fixed expenses 49,000
Net operating income $ 59,000
Required:
(Consider each case independently):
1. What is the revised net operating income if unit salesincrease by 15%?
2. What is the revised net operating income if the selling pricedecreases by $1.30 per unit and the number of units sold increasesby 20%?
3. What is the revised net operating income if the selling priceincreases by $1.30 per unit, fixed expenses increase by $9,000, andthe number of units sold decreases by 8%?
4. What is the revised net operating income if the selling priceper unit increases by 20%, variable expenses increase by 30 centsper unit, and the number of units sold decreases by 12%?

Answer & Explanation Solved by verified expert

4.0 Ratings (449 Votes)


1)
	Sale units	(36000*115%)=			41400
	contribution margin per unit				3

	total contribution margin				124200
	less:fixed expense				49,000
	Net operating income				75,200



2)
	Sale units	(36000*120%)=			43200
	contribution margin per unit			(3-1.30)=	1.7

	total contribution margin				73440
	less:fixed expense				49,000
	Net operating income				24,440



3)
	Sale units	(36000*92%)=			33120
	contribution margin per unit			(3+1.30)=	4.3

	total contribution margin				142416
	less:fixed expense				58,000
	Net operating income				84,416



4)	Selling price per unit		(7*120%)=		8.4
	varible expense		(4+.30)		4.3
	contribution margin per unit				4.1



	Sale units	(36000*88%)=			31680
	contribution margin per unit				4.1

	total contribution margin				129888
	less:fixed expense				49,000
	Net operating income				80,888

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:

Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!

Become a Member

Transcribed Image Text

In: AccountingExercise 5-13 Changes in Selling Price, Sales Volume, VariableCost per Unit, and Total Fixed Costs...Exercise 5-13 Changes in Selling Price, Sales Volume, VariableCost per Unit, and Total Fixed Costs [LO5-1, LO5-4]Miller Company’s contribution format income statement for themost recent month is shown below:TotalPer UnitSales (36,000units)$252,000$7.00Variable expenses144,0004.00Contribution margin108,000$3.00Fixed expenses49,000Net operating income$59,000Required:(Consider each case independently):1. What is the revised net operating income if unit salesincrease by 15%?2. What is the revised net operating income if the selling pricedecreases by $1.30 per unit and the number of units sold increasesby 20%?3. What is the revised net operating income if the selling priceincreases by $1.30 per unit, fixed expenses increase by $9,000, andthe number of units sold decreases by 8%?4. What is the revised net operating income if the selling priceper unit increases by 20%, variable expenses increase by 30 centsper unit, and the number of units sold decreases by 12%?

	Total		Per Unit
Sales (36,000units)	$	252,000	$	7.00
Variable expenses		144,000		4.00
Contribution margin		108,000	$	3.00
Fixed expenses		49,000
Net operating income	$	59,000