Question

Whirly Corporation's contribution format income statement for the most recent month is shown below: Per Unit 32.00 19.00 $13.00 Total Sales (8,900 units) Variable expenses Contribution margin Fixed expenses Net operating income $ 284,800 169,100 115,700 55,200 $ 60,500 Required: (Consider each case independently) 1. What would be the revised net operating income per month if the sales volume increases by 70 units? 2. What would be the revised net operating income per month if the sales volume decreases by 70 units? 3. What would be the revised net operating income per month if the sales volume is 7,900 units? 1.Revised net operating income 2. Revised net operating income 3. Revised net operating income

Answer 1

NOTE:Variable expense per unit and Total fixed costs do not change with change in units.

	Case 1	Case 2	Case 3
Units	(8900+70)=8970 units	(8900-70)=8830 units	7900 units
Sales	(8970*32)=287040	(8830*32)=282560	(7900*32)=252800
Variable expenses	(8970*19)=170430	(8830*19)=167,770	(7900*19)=150100
Contribution margin	116610	114790	102700
Fixed expenses	55200	55200	55200
Revised net operating income	$61410	$59590	$47500.