Question 1

Miller Companys most recent contribution format income statement is shown below:

	Total	Per Unit
Sales (31,000 units)	$248,000	$8.00
Variable expenses	155,000	5.00
Contribution margin	93,000	$3.00
Fixed expenses	41,000
Net operating income	$ 52,000

Required:

Prepare a new contribution format income statement under each of the following conditions (consider each case independently): (Do not round intermediate calculations. Round your "Per unit" answers to 2 decimal places.)

1. The number of units sold increases by 13%.

2. The selling price decreases by $1.40 per unit, and the number of units sold increases by 22%.

3. The selling price increases by $1.40 per unit, fixed expenses increase by $8,000, and the number of units sold decreases by 6%.

4. The selling price increases by 20%, variable expenses increase by 30 cents per unit, and the number of units sold decreases by 6%.

Question2

Olongapo Sports Corporation distributes two premium golf ballsthe Flight Dynamic and the Sure Shot. Monthly sales and the contribution margin ratios for the two products follow:

	Product
	Flight Dynamic	Sure Shot	Total
Sales	$710,000	$290,000	$1,000,000
CM ratio	66%	72%	?

Fixed expenses total $587,000 per month.

Required:

1. Prepare a contribution format income statement for the company as a whole. Round your percentage answers to 2 decimal places (i.e. .1234 is considered as 12.34).

2. Compute the break-even point for the company based on the current sales mix. (Do not round intermediate calculations. Round your answer to the nearest whole dollar amount.)

3. If sales increase by $45,000 a month, by how much would you expect net operating income to increase? (Do not round intermediate calculations. Round your answer to the nearest whole dollar amount.)