Question

White Limited’s most recent income statement is shown below:

	Total			Per Unit
Sales (5,900 units)	$	283,200		$	48
Variable expenses		147,500			25
Contribution margin		135,700		$	23
Fixed expenses		118,450
Operating income	$	17,250

Required:

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

1. The sales volume increases by 300 units.

2. The sales volume declines by 300 units.

3. The sales volume is 5,150 units.

Answer 1

1. The sales volume increases by 300 Unjts.

Sales 6,200 units	$ 297,600
Less: Variable costs	($ 155,000)
Contribution margin	$ 142,600
Less: fixed expenses	( $ 118,450)
Operating income	$ 24,150

2. Sales volume declines by 300 units.

Sales 5,600 units	$ 268,800
Less: Variable costs	( $ 140,000)
Contribution margin	$ 128,800
Less: Fixed expenses	( $ 118,450)
Operating income	$ 10,350

3. Sales volume is 5,150 units.

Sales 5,150 units	$ 247,200
Less: Variable costs	( $ 128,750)
Contribution margin	$ 118,450
Less: Fixed expenses	( $ 118,450)
Operating income	$ 0

SUMMARY:

All requirements have been provided.