Question

Whirly Corporation's contribution format income statement for the most recent month is shown below: Sales (7,700 units) Variable expenses Contribution margin Fixed expenses Net operating income Total $ 261,800 146,300 115,500 55,200 $ 60,300 Per Unit $ 34.00 19.00 $ 15.00 Required: (Consider each case independently): 1. What would be the revised net operating income per month if the sales volume increases by 60 units? 2. What would be the revised net operating income per month if the sales volume decreases by 60 units? 3. What would be the revised net operating income per month if the sales volume is 6,700 units? 1. Revised net operating income 2. Revised net operating income 3. Revised net operating income

Answer 1

	Case 1	Case 2	Case 3
Units sold	(7700+60)=7760	((7700-60)=7640	6700
Sales	(7760*34)=263840	(7640*34)=259760	(6700*34)=227800
Variable expenses	(7760*19)=147440	(7640*19)=145160	(6700*19)=127300
Contribution margin	116400	114600	100500
Fixed expenses	55200	55200	55200
Revised net operating income	$61200	$59400	$45300