Question

Whirly Corporation's contribution format income statement for the most recent month is shown below: Sales (7,500 units) Variable expenses Contribution margin Total $ 247,500 150,000 Per Unit $ 33.00 20.00 $ 13.00 Fixed expenses Net operating income 97,500 55,300 $ 42,200 Required: (Consider each case independently): 1. What would be the revised net operating income per month if the sales volume increases by 80 units? 2. What would be the revised net operating income per month if the sales volume decreases by 80 units? 3. What would be the revised net operating income per month if the sales volume is 6,500 units? 1. Revised net operating income Revised net operating income 3. Revised net operating income

Answer 1

Answer

1	Revised net operating income	$        43,240
2	Revised net operating income	$        41,160
3	Revised net operating income	$        29,200

Detailed Workings

When sale volume increase by 80 units
	Units	Per unit	Total
Sales	7580	$           33	$        250,140
Variable Expenses	7580	$           20	$        151,600
Contribution margin	7580	$           13	$          98,540
Fixed Expense			$          55,300
Net Operating Income			$          43,240
When sales volume decrease by 80 Units
	Units	Per unit	Total
Sales	7420	$           33	$        244,860
Variable Expenses	7420	$           20	$        148,400
Contribution margin	7420	$           13	$          96,460
Fixed Expense			$          55,300
Net Operating Income			$          41,160
When Sale Volume is 6500 units
	Units	Per unit	Total
Sales	6500	$           33	$        214,500
Variable Expenses	6500	$           20	$        130,000
Contribution margin	6500	$           13	$          84,500
Fixed Expense			$          55,300
Net Operating Income			$          29,200

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