Question

Whirly Corporation's contribution format income statement for the most recent month is shown below: Sales (8. 400 units) Variable expenses Contribution margin Fixed expenses Net operating income Total $ 268, 800 159, 600 109, 200 54,200 $ 55,000 Per Unit $ 32.00 19.00 $ 13.00 Required: (Consider each case independently): 1. What would be the revised net operating income per month if the sales volume increases by 50 units? 2. What would be the revised net operating income per month if the sales volume decreases by 50 units? 3. What would be the revised net operating income per month if the sales volume is 7,400 units? 1. Revised net operating income 2. Revised net operating income 3. Revised net operating income

Answer 1

The answer has been presented in the supporting sheet. For detailed answer refer to the supporting sheet.

Answer Part 1) Revised net operating income if sale volume increases by 50 Units = current profit + (increased unit sold * contribution margin per unit) = 55000 + (50*13) = 55000 +650 = $ 55650 Part 2) Revised net operating income if sale volume decreases by 50 Units 1 = current profit - decreased unit * contribution margin per unit) e = 55000 - (50*13) B = 55000-650 1 = $ 54350 Part 3) Revised net operating income = cotribution margin of 7400 units - fixed cost = (7400*13) - 54200 = $ 42000 thus the final answer is 1 Revised net operating income 2 Revised net operating income 3 Revised net operating income 55650 54350 42000