Exercise 6-4 (Algo) Computing and Using the CM Ratio [LO6-3]

Last month when Holiday Creations, Incorporated, sold 38,000 units, total sales were $152,000, total variable expenses were $118,560, and fixed expenses were $37,700.

Required:

1. What is the companys contribution margin (CM) ratio?

2. What is the estimated change in the companys net operating income if it can increase sales volume by 275 units and total sales by $1,100? (Do not round intermediate calculations.)

Exercise 6-13 (Static) Changes in Selling Price, Sales Volume, Variable Cost per Unit, and Total Fixed Costs [LO6-1, LO6-4]

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

	Total	Per Unit
Sales (20,000 units)	$ 300,000	$ 15.00
Variable expenses	180,000	9.00
Contribution margin	120,000	$ 6.00
Fixed expenses	70,000
Net operating income	$ 50,000

Required:

(Consider each case independently):

1. What is the revised net operating income if unit sales increase by 15%?

2. What is the revised net operating income if the selling price decreases by $1.50 per unit and the number of units sold increases by 25%?

3. What is the revised net operating income if the selling price increases by $1.50 per unit, fixed expenses increase by $20,000, and the number of units sold decreases by 5%?

4. What is the revised net operating income if the selling price per unit increases by 12%, variable expenses increase by 60 cents per unit, and the number of units sold decreases by 10%?