Question

Please help.

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 $ 299,200 176,000 123,200 54,100 $ 69,100 Per Unit $ 34.00 20.00 $ 14.00 Required: (Consider each case independently): 1. What would be the revised net operating income per month if the sales volume increases by 30 units? 2. What would be the revised net operating income per month if the sales volume decreases by 30 units? 3. What would be the revised net operating income per month if the sales volume is 7,800 units?

Answer 1

1 Revised Net Operating Income $69,520 12 Revised Net Operating Income $68,680 3 Revised Net Operating Income $ 55,100 Working Notes: Contribution Margin per Unit = $14 Net Operating Income = $69,100 Fixed Expenses =$54,100 a Incresed sales volume = 30 Change in Net Operating Income = Change in sales Volume * Contribution margin per unit = 30*$14 = $420 Revised Net Operating Income = $69,100+$420 = $69,520 b Decreased sales volume = 30 Change in Net Operating Income = Change in sales Volume * Contribution margin per unit = 30*$14 = $420 Revised Net Operating Income = $69,100-$420 = $68,680 c. Sales Volume = 7,800 Units Contribution Margin = 7,800*S14 = $109,200 net operating Income = Contribution margin - Fixed expenses = $109,200-$54,100 = $55,100