Question

Whirly Corporation’s most recent income statement is shown below: Total Per Unit   Sales (7,200 units) $...

Whirly Corporation’s most recent income statement is shown below:
Total Per Unit
  Sales (7,200 units) $ 237,600 $ 33.00
  Variable expenses 129,600 18.00
  Contribution margin 108,000 $ 15.00
  Fixed expenses 54,800
  Net operating income $ 53,200


Required:

Prepare a new contribution format income statement under each of the following conditions (consider each case independently):
1.

The sales volume increases by 50 units.

      

2.

The sales volume decreases by 50 units.

      

3.

The sales volume is 6,200 units.

     

Business   Accounting   
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Answer #1

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

1. The sales volume increases by 50 units

Sales (7250*33) 239250
Less: Variable cost (7250*18) (130500)
Contribution margin (7250*15) 108750
Less: Fixed cost (54800)
Net operating income 53950

2. The sales volume decreases by 50 units.

Sales (7150*33) 235950
Less: Variable cost (7150*18) (128700)
Contribution margin (7150*15) 107250
Less: Fixed cost (54800)
Net operating income 52450

3.The sales volume is 6,200 units.

Sales (6200*33) 204600
Less: Variable cost (6200*18) (111600)
Contribution margin (6200*15) 93000
Less: Fixed cost (54800)
Net operating income 38200
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