Question

Whirly Corporation’s most recent income statement is shown below:

	Total		Per Unit
Sales (8,900 units)	$	284,800	$	32.00
Variable expenses		169,100		19.00
Contribution margin		115,700	$	13.00
Fixed expenses		54,900
Net operating income	$	60,800

Required:

Prepare a new contribution format income statement under each of the following conditions (consider each case independently):

1.	The sales volume increases by 80 units.

      

2.	The sales volume decreases by 80 units.

      

3.	The sales volume is 7,900 units.

     

Answer 1

1.  The sales volume increases by 80 units

Sales (8980*32)	287360
Less : Variable expenses (8980*19)	-170620
Contribution margin	116740
Fixed expenses	-54900
Net operating income	61840

2. The sales volume decreases by 80 units

Sales (8820*32)	282240
Less : Variable expenses (8820*19)	-167580
Contribution margin	114660
Fixed expenses	-54900
Net operating income	59760

3.  The sales volume is 7,900 units

Sales (7900*32)	252800
Less : Variable expenses (7900*19)	-150100
Contribution margin	102700
Fixed expenses	-54900
Net operating income	47800