Question

Whirly Corporation's contribution format income statement for the most recent month is shown below: Total $ 270,600 155,800 Per Unit $ 33.00 19.00 $ 14.00 Sales (8,200 units) Variable expenses Contribution margin Fixed expenses Net operating income 114,800 54,500 $ 60,300 Required: (Consider each case independently): 1. What would be the revised net operating income per month if the sales volume increases by 90 units? 2. What would be the revised net operating income per month if the sales volume decreases by 90 units? 3. What would be the revised net operating income per month if the sales volume is 7,200 units? 1. Revised net operating income 2. Revised net operating income 3. Revised net operating income

Answer 1

Solution

1	Revised net operating income	$ 61,560
2	Revised net operating income	$ 59,040
3	Revised net operating income	$ 46,300

Working

	Per unit	Total at 8290 units	Total at 8110 units	Total at 7200 units
Sales	$ 33	$ 273,570	$ 267,630	$ 237,600
Variable cost	$ 19	$ 157,510	$ 154,090	$ 136,800
Contribution margin	$ 14	$ 116,060	$ 113,540	$ 100,800
Fixed expenses		$ 54,500	$ 54,500	$ 54,500
Net operating income		$ 61,560	$ 59,040	$ 46,300