Question
Shown here are condensed income statements for two different companies (both are organized as LLCs and pay no income taxes). Miller Company Sales $ 1,000,000
Shown here are condensed income statements for two different companies (both are organized as LLCs and pay no income taxes).
| Miller Company | |||
| Sales | $ | 1,000,000 | |
| Variable expenses (80%) | 800,000 | ||
| Income before interest | 200,000 | ||
| Interest expense (fixed) | 60,000 | ||
| Net income | $ | 140,000 | |
| Weaver Company | |||
| Sales | $ | 1,000,000 | |
| Variable expenses (60%) | 600,000 | ||
| Income before interest | 400,000 | ||
| Interest expense (fixed) | 260,000 | ||
| Net income | $ | 140,000 | |
Problem 9-5A Part 5
5. What happens to each companys net income if sales increase by 80%? (Round your answers to nearest whole percent.)
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6. What happens to each companys net income if sales decrease by 10%? (Round your answers to nearest whole percent.)
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7. What happens to each companys net income if sales decrease by 20%? (Round your answers to nearest whole percent.)
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8. What happens to each companys net income if sales decrease by 40%? (Round your answers to nearest whole percent.)
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GAO Financial Audit Manual Volume 2 Updated March 2021
Authors: United States Government GAO
2021 Edition
B091WM9DZW, 979-8733082875
