Question

Whirly Corporation's contribution format income statement for the most recent month is shown below: Sales (7,400 units) Variable expenses Contribution margin Fixed expenses Net operating income Total $ 236,800 140,600 96, 200 54,100 $ 42,100 Per Unit $ 32.00 19.00 $ 13.00 Required: (Consider each case independently): 1. What would be the revised net operating income per month if the sales volume increases by 100 units? 2. What would be the revised net operating income per month if the sales volume decreases by 100 units? 3. What would be the revised net operating income per month if the sales volume is 6,400 units? 1. Revised net operating income 2. Revised net operating income 3. Revised net operating income

Answer 1

Answer

1.

Sales Volume increases by 100 units

Sales (7,500 units*$32)	$240,000
Less: Variable expenses (7,500*19)	(142,500)
Contribution margin	97,500
Less: Fixed Expenses	(54,100)
Net Operating Income	43,400

Sales Volume decreases by 100 units

Sales (7,300 units*$32)	$233,600
Less: Variable expenses (7,300*19)	(138,700)
Contribution margin	94,900
Less: Fixed Expenses	(54,100)
Net Operating Income	40,800

Sales Volume is 6,400 units

Sales (6,400 units*$32)	$204,800
Less: Variable expenses (6,400*19)	(121,600)
Contribution margin	83,200
Less: Fixed Expenses	(54,100)
Net Operating Income	29,100

1.	Revised net operating income	$43,400
2.	Revised net operating income	$40,800
3.	Revised net operating income	$29,100