please help me to solve this Exercises EXERCISE 8-1 Using a Contribution Margin
ID: 2574093 • Letter: P
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Exercises EXERCISE 8-1 Using a Contribution Margin Format Income Statement [LO1- CC1, 3, 4] Miller Company's most recent income statement follows: Total $300,000 180,000 120,000 70,000 50,000 Per Unit $16 Sales (20,000 units) Less: Variable expenses Contribution margin Less: Fixed expenses Net income S 6 Requirea: Prepare a new income statement under each of the following conditions (consider each case independently) The sales volume increases by 15%, and the selling price decreases by $1.00 2. The selling price decreases by $2.50 per unit, and the sales volume increases by 25%. 3. The selling price increases by $0.50 per unit, fixed expenses increase by $20,000, and the sales volume decreases by 5% 4. The selling price increases by 5%, variable expenses increase by 60 cents per unit, and the sales volume decreases by 10%Explanation / Answer
Contribution Margin Income statement
Units
selling price/cost per unit
total
sales
20000
16
320000
less variable cost
20000
9
180000
contribution margin
20000
7
140000
less fixed cost
70000
operating profit
70000
if sales increase by 15% and selling price decrease by 1
sales
23000
15
345000
less variable cost
23000
9
207000
contribution margin
23000
6
138000
less fixed cost
70000
operating profit
68000
if sales increase by 25% and selling price decrease by 2.5
sales
25000
13.5
337500
less variable cost
25000
9
225000
contribution margin
25000
4.5
112500
less fixed cost
70000
operating profit
42500
if sales decrease by 5% and selling price increase by .5 and fixed cost increase by 20000
sales
19000
16.5
313500
less variable cost
19000
9
171000
contribution margin
19000
7.5
142500
less fixed cost
90000
operating profit
52500
if sales decrease by 10% and selling price increase by 5% and variable cost increase by 60%
sales
18000
16.8
302400
less variable cost
18000
14.4
259200
contribution margin
18000
2.4
43200
less fixed cost
70000
operating profit
-26800
Contribution Margin Income statement
Units
selling price/cost per unit
total
sales
20000
16
320000
less variable cost
20000
9
180000
contribution margin
20000
7
140000
less fixed cost
70000
operating profit
70000
if sales increase by 15% and selling price decrease by 1
sales
23000
15
345000
less variable cost
23000
9
207000
contribution margin
23000
6
138000
less fixed cost
70000
operating profit
68000
if sales increase by 25% and selling price decrease by 2.5
sales
25000
13.5
337500
less variable cost
25000
9
225000
contribution margin
25000
4.5
112500
less fixed cost
70000
operating profit
42500
if sales decrease by 5% and selling price increase by .5 and fixed cost increase by 20000
sales
19000
16.5
313500
less variable cost
19000
9
171000
contribution margin
19000
7.5
142500
less fixed cost
90000
operating profit
52500
if sales decrease by 10% and selling price increase by 5% and variable cost increase by 60%
sales
18000
16.8
302400
less variable cost
18000
14.4
259200
contribution margin
18000
2.4
43200
less fixed cost
70000
operating profit
-26800
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