Whirly Corporation’s contribution format income statement for the most recent month is shown below:
Total | Per Unit | |||||
Sales (8,300 units) | $ | 282,200 | $ | 34.00 | ||
Variable expenses | 157,700 | 19.00 | ||||
Contribution margin | 124,500 | $ | 15.00 | |||
Fixed expenses | 54,600 | |||||
Net operating income | $ | 69,900 | ||||
Required:
(Consider each case independently):
1. What would be the revised net operating income per month if the sales volume increases by 40 units?
2. What would be the revised net operating income per month if the sales volume decreases by 40 units?
3. What would be the revised net operating income per month if the sales volume is 7,300 units?
ANSWER:
(1)
number of sales units = 8300 + 40 = 8340
revised net operating income = total contribution margin - fixed expenses
= (8340 x $15) - $54600
= $125100 - $54600
= $70500
(2)
number of sales units = 8300 - 40 = 8260
revised net operating income = total contribution margin - fixed expenses
= (8260 x $15) - $54600
= $123900 - $54600
= $69300
(3)
number of sales units = 7300
revised net operating income = total contribution margin - fixed expenses
= (7300 x $15) - $54600
= $109500 - $54600
= $54900
Whirly Corporation’s contribution format income statement for the most recent month is shown below: Total Per...
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