Thursday, 1 May 2014

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



Exercise 6-11 Using a Contribution Format Income Statement [LO1, LO4]
Miller Company's most recent contribution format income statement is shown below:


Total
Per Unit
  Sales (41,000 units)
$246,000  
$6.00  
  Variable expenses
164,000  
4.00  
  Contribution margin
82,000  
$2.00  
  Fixed expenses
40,000  

  Net operating income
$42,000  



 
Required:
Prepare a new contribution format income statement under each of the following conditions (consider each case independently) (Round per unit values to 2 decimal places and the rest to the nearest dollar amount. Input all amounts as positive values. Omit the "$" sign in your response):

(1)
The number of units sold increases by 19%.


Total
Per Unit
  Sales
$  
$  
  Variable expenses


  Contribution margin

$  
  Fixed expenses


  Net operating income
$  




(2)
The selling price decreases by $0.70 per unit, and the number of units sold increases by 17%.


Total
Per Unit
  Sales
$  
$  
  Variable expenses


  Contribution margin

$  
  Fixed expenses


  Net operating income
$  




(3)
The selling price increases by $0.30 per unit, fixed expenses increase by $5,000, and the number of units sold decreases by 4%.


Total
Per Unit
  Sales
$  
$  
  Variable expenses


  Contribution margin

$  
  Fixed expenses


  Net operating income
$  




(4)
The selling price increases by 10%, Variable expenses increase by 30 cents per unit, and the number of units sold decreases by 8%.


Total
Per Unit
  Sales
$  
$  
  Variable expenses


  Contribution margin

$  
  Fixed expenses


  Net operating income
$  



 

Explanation:
(1) Sales (41,000 units × 1.19 = 48,790 units)
(2) Sales (41,000 units × 1.17 = 47,970 units)

(3) Sales (41,000 units × 0.96 = 39,360 units)

(4) Sales (41,000 units × 0.92 = 37,720 units)