Question

Whirly Corporation’s most recent income statement is shown below: Total Per Unit Sales (8,400 units) $ 260,400 $ 31.00 Variable expenses 151,200 18.00 Contribution margin 109,200 $ 13.00 Fixed expenses 55,500 Net operating income $ 53,700 Required: Prepare a new contribution format income statement under each of the following conditions (consider each case independently): 1. The sales volume increases by 30 units. 2. The sales volume decreases by 30 units. 3. The sales volume is 7,400 units.

Answer 1

1) Contribution format income statement

	Total	Per Unit
Sales	8430*31 = 261330	31
Variable cost	8430*18 = 151740	18
Contribution margin	109590	13
Fixed cost	55500
Net operating income	54090

2) Contribution format income statement

	Total	Per Unit
Sales	8370*31 = 259470	31
Variable cost	8370*18 = 150660	18
Contribution margin	108810	13
Fixed cost	55500
Net operating income	53310

3) Contribution format income statement

	Total	Per Unit
Sales	7400*31 = 229400	31
Variable cost	7400*18 = 133200	18
Contribution margin	96200	13
Fixed cost	55500
Net operating income	40700