Question

Whirly Corporation’s most recent income statement is shown below:

	Total		Per Unit
Sales (7,300 units)	$	240,900	$	33.00
Variable expenses		138,700		19.00
Contribution margin		102,200	$	14.00
Fixed expenses		55,400
Net operating income	$	46,800

Required:

Prepare a new contribution format income statement under each of the following conditions (consider each case independently):

1.	The sales volume increases by 80 units.

     

2.	The sales volume decreases by 80 units.

     

3.	The sales volume is 6,300 units.

     

Answer 1

1a) if sales volume increases by 80units,

   If sales volume increases then they will be proportional increase in variable cost

There fore

   Income statement

Particular	per unit	total
Sales (7300+80)units = 7380 units	$33	$243540
(-) variable cost	$19	($140220)
Contribution	$14	$103320
(-) fixed expenses		($55400)
net operating income		$47920

2) if sales volume decrease by 80 units

   If sales volume decrease then they will be proportional decrease in variable cost also

Particular	per unit	amount
Sales (7300 - 80) 7220 units	$33	$238260
(-) variable expenses	$19	($137180)
Contribution	$14	$101080
(-) fixed expenses		($55400)
NET OPERATING INCOME		$45680

3) if sales volume 6300 units, then income statement

   Income statement

Particular	per unit	amount
Sales (6300)	$33	$207900
(-) variable expenses	$19	($119700)
Contribution	$14	$88200
(-) fixed expenses		($55400)
NET OPERATING INCOME		$32800

ALL THE BEST

   PLEASE DO SUPPORT US

   ANY DOUBT PLEASE COMMENT BELOW

THANK YOU