Question

Whirly Corporation's contribution format income statement for the most recent month is shown below: Sales (8,800 units) Variable expenses Contribution margin Fixed expenses Net operating income Total $ 272,800 176,000 96,800 55,800 $ 41,000 Per Unit $31.00 20.00 $ 11.00 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 7,800 units? 1. Revised net operating income 2. Revised net operating income 3. Revised net operating income

Answer 1

1.

Income Statement
	Total	Per unit
Sales ( 8,840 x 31)	274,040	31
Variable expenses ( 8,840 x 20)	176,800	20
Contribution Margin	97,240	11
Fixed expenses	55,800
Revised net operating income	$41,440

2.

Income Statement
	Total	Per unit
Sales ( 8,760 x 31)	271,560	31
Variable expenses ( 8,760 x 20)	175,200	20
Contribution Margin	96,360	11
Fixed expenses	55,800
Revised net operating income	$40,560

3.

Income Statement
	Total	Per unit
Sales ( 7,800 x 31)	241,800	31
Variable expenses ( 7,800 x 20)	156,000	20
Contribution Margin	85,800	11
Fixed expenses	55,800
Revised net operating income	$30,000

1. Revised net operating income	41,440
2. Revised net operating income	40,560
3. Revised net operating income	30,000

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