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11 January, 16:57

Miller Company's contribution format income statement for the most recent month is shown below: Total Per unitSales (33,000 units) $330,000 $10.00 Variable expenses $231,000 $7.00Contribution margin 99,000 $3.00 Fixed expenses 50,000 Net operating income $49,000 Required: (Consider each case independently) : 1. What is the revised net operating income if unit sales increase by 13%?2. 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%?3. What is the revised net operating income if the selling price increases by $1.20 per unit, fixed expenses increase by $7,000, and the number of units sold decreases by 4%?4. What is the revised net operating income if the selling price per unit increases by 10%, variable expenses increase by 30 cents per unit, and the number of units sold decreases by 12%?

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  1. 11 January, 19:10
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    Instructions are listed below.

    Explanation:

    Giving the following information:

    Sales (33,000 units for $10) = $330,000

    Variable expenses $231,000 ($7.00)

    Contribution margin 99,000 ($3.00)

    Fixed expenses 50,000

    Net operating income $49,000

    1) Increase in sales = 13%

    Income = (33,000*1.13) * $3 - 50,000 = $61,870

    2) Price = $8.8

    Units sale = 33,000*1.24 = 40,920

    Income = (8.8 - 7) * 40,920 - 50,000 = $23,656

    3) Price = 11.2

    Sales = 33,000*0.96 = 31,680

    Fixed costs = 57,000

    Income = (11.2 - 7) * 31,680 - 57,000 = $76,056

    4) Price = 11

    Variable cost = 7.3

    Sales = 33,000*0.88 = 29,040

    Income = (11-7.3) * 29,040 - 50,000 = $57,448
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