Question

Whirly Corporation's contribution format income statement for the most recent month is shown below: Total $ 299,200 176,000 123,200 54,500 $ 68,700 Per Unit $ 34.00 20.00 $ 14.00 Sales (8,800 units) Variable expenses Contribution margin Fixed expenses Net operating income Required: (Consider each case independently): 1. What would be the revised net operating income per month if the sales volume increases by 50 units? 2. What would be the revised net operating income per month if the sales volume decreases by 50 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

As per HOMEWORKLIB POLICY Only 1 Question will be Answered per Post. But i Answered First 2 QUestions. Thank You.

1)
Particulars	Amount (in $ )
Sales ( 8,800 Units + 50 Units ) x $ 34	$ 300,900
Less: Variable expense           ( 8,800 Units + 50 Units ) x $ 20	($ 177,000)
Contribution margin	$ 123,900
Less: Fixed expenses	($ 54,500)
Revised Net operating income	$ 69,400
2)
Particulars	Amount (in $ )
Sales ( 8,800 Units (-) 50 units) x $ 34	$ 297,500
Less: Variable expense       ( 8,800 Units (-) 50 units) x $ 20	($ 175,000)
Contribution margin	$ 122,500
Less: Fixed expenses	($ 54,500)
Revised Net operating income	$ 68,000
3)
Particulars	Amount (in $ )
Sales 7,800 units x $ 34	$ 265,200
Less: Variable expense       7,800units x $ 20	($ 156,000)
Contribution margin	$ 109,200
Less: Fixed expenses	($ 54,500)
Revised Net operating income	$ 54,700

Answer:

Contribution margin per unit           = Selling price per unit (-) Variable cost per Unit           =     $ 130 (-) $ 65           =     $ 65

Contribution margin ratio           = Contribution margin per unit / Selling price per unit           =     $ 65 / $ 130           =     50%

1)

Unit Sales needed to attain target profit              = ( Fixed Cost + Taget Profit ) / Contribution margin per unit              =   ( $ 32,550 + $ 3,850 ) / $ 65              =   $ 36,400 / $ 65              =    560 Units

Unit Sales needed to attain target profit   =   560 Units

2)

Dollar Sales needed to attain target profit              = ( Fixed Cost + Taget Profit ) / Contribution margin ratio              =   (   $ 32,550 + $ 8,100 ) / 50%              =   $ 40,650 / 50%              =   $ 81,300

Dollar Sales needed to attain target profit =   $ 81,300