2. Miller Company\'s last month contribution format income statement is shown be

Question

2. Miller Company's last month contribution format income statement is shown below: Total $450,000 $180,000 $270,000 $9 $220,000 $50,000 per unit Sales Variable Expense Contribution Margin Fixed Expense Net operating Income The president believes that the company could reduce variable costs by $2.00 per unit. However, fixed costs would increase by $42,000 each month. If the president is right, w will be the effect on the company's monthly net operating income or loss? (Choose the answer.) A. A decrease of $18,000 B. An increase of $68,000 C. An increase of $18,000 D. A decrease of $68,000 E. An increase of $102,000

Explanation / Answer

Current unit sales=(270,000/9)=30000 units

Hence increase in Contribution margin=(2*30,000)=$60,000

Les:increase in FC=($42000)

Hence net increase in net operating income=$18000(C).

Related Questions

Navigate

• Browse (All)
• Browse 2
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.