Question

Whirly Corporation's contribution format income statement for the most recent month is shown below: Total $ 308,000 176,000 Sales (8,800 units) Variable expenses Contribution margin Fixed expenses Net operating income Per Unit $ 35.00 20.00 $ 15.00 132,000 54,300 77,700 $ 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? 1. Revised net operating income 2. Revised net operating income 3. Revised net operating income

Answer 1

1.

Contribution margin income statement

	Total	Per unit
Sales	8,830 x 35 = 309,050	35
Variable cost	8,830 x 20 = 176,600	20
Contribution margin	132,450
Fixed cost	54,300
Net Operating income	78,150

2.

Contribution margin income statement

	Total	Per unit
Sales	8,770 x 35 = 306,950	35
Variable cost	8,770 x 20 = 175,400	20
Contribution margin	131,550
Fixed cost	54,300
Net Operating income	77,250

3.

Contribution margin income statement

	Total	Per unit
Sales	7,800 x 35 = 273,000	35
Variable cost	7,800 x 20 = 156,000	20
Contribution margin	117,000
Fixed cost	54,300
Net Operating income	62,700

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