Answer:
Miller Company
1. The revised net operating income if unit sales increase by 11%:
= $ 53,900
2. The revised net operating income if the selling price decreases by $1.20 per unit and the number of units sold increases by 21%:
= $ 50,840
3. The revised net operating income if the selling price increases by $1.20 per unit, fixed expenses increase by $9,000, and the number of units sold decreases by 7%:
= $ 51,680
4. The revised net operating income if the selling price per unit increases by 10%, variable expenses increase by 40% per unit, and the number of units sold decreases by 9%:
= $ 3,140
Step-by-step explanation:
a) Data and Calculations:
Total Per Unit
Sales (30,000 units) $ 240,000 $ 8.00
Variable expenses 150,000 5.00
Contribution margin 90,000 $ 3.00
Fixed expenses 46,000
Net operating income $ 44,000
1. The revised net operating income if unit sales increase by 11%:
Unit sales = 33,300 (30,000 * 1.11)
Total Per Unit
Sales (33,300 units) $ 266,400 $ 8.00
Variable expenses 166,500 5.00
Contribution margin 99,900 $ 3.00
Fixed expenses 46,000
Net operating income $ 53,900
2. The revised net operating income if the selling price decreases by $1.20 per unit and the number of units sold increases by 21%:
Selling price = $6.80 ($8.00 - $1.20)
Unit sales = 36,300 (30,000 * 1.21)
Total Per Unit
Sales (36,300 units) $ 246,840 $ 6.80
Variable expenses 150,000 5.00
Contribution margin 96,840 $ 3.00
Fixed expenses 46,000
Net operating income $ 50,840
3. The revised net operating income if the selling price increases by $1.20 per unit, fixed expenses increase by $9,000, and the number of units sold decreases by 7%:
Selling price = $9.20 ($8.00 + $1.20)
Fixed expenses = $55,000 ($46,000 + $9,000)
Unit sales = 27,900 (30,000 * (1 - 0.07)
Total Per Unit
Sales (27,900 units) $ 256,680 $ 9.20
Variable expenses 150,000 5.00
Contribution margin 106,680 $ 3.00
Fixed expenses 55,000
Net operating income $ 51,680
4. The revised net operating income if the selling price per unit increases by 10%, variable expenses increase by 40% per unit, and the number of units sold decreases by 9%:
Selling price = $8.80 ($8.00 * 1.1)
Variable expenses = $7.00 ($5.00 * 1.4)
Unit sales = $27,300 (30,000 * (1 - 0.09)
Total Per Unit
Sales (27,300 units) $ 240,240 $ 8.80
Variable expenses 191,100 7.00
Contribution margin 49,140 $ 3.00
Fixed expenses 46,000
Net operating income $ 3,140