Question

Exercise 6-1 The Effect of Changes in Activity on Net Operating Income [LO6-1]

Whirly Corporation’s contribution format income statement for the most recent month is shown below:

	Total			Per Unit
Sales (7,700 units)	$	238,700		$	31.00
Variable expenses		146,300			19.00
Contribution margin		92,400		$	12.00
Fixed expenses		54,600
Net operating income	$	37,800

Required:

(Consider each case independently):

1. What would be the revised net operating income per month if the sales volume increases by 100 units?

2. What would be the revised net operating income per month if the sales volume decreases by 100 units?

3. What would be the revised net operating income per month if the sales volume is 6,700 units?

Answer 1

Working note: