Question

Whirly Corporation's contribution format income statement for the most recent month is shown below: Sales (8,400 units) Variable expenses Contribution margin Fixed expenses Net operating income Total $ 294, 000 159, 600 134,400 54,100 $ 80,300 Per Unit $ 35.00 19.00 $ 16.00 Required: (Consider each case independently): 1. What would be the revised net operating income per month if the sales volume increases by 70 units? 2. What would be the revised net operating income per month if the sales volume decreases by 70 units? 3. What would be the revised net operating income per month if the sales volume is 7,400 units? 1. Revised net operating income 2. Revised net operating income 3. Revised net operating income

Answer 1

1.	Revised net operating income = Current net operating income + ( Increase in sales volume * Contribution margin per unit ) = 80300 + ( 70 * 16 )	81420
2.	Revised net operating income = Current net operating income - ( Decrease in sales volume * Contribution margin per unit ) = 80300 - ( 70 * 16 )	79180
3.	Revised net operating income = ( Sales volume * Contribution margin per unit ) - Fixed expenses = ( 7400 * 16 ) - 54100	64300