Question

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

	Total			Per Unit
Sales (8,900 units)	$	275,900		$	31.00
Variable expenses		160,200			18.00
Contribution margin		115,700		$	13.00
Fixed expenses		54,700
Net operating income	$	61,000

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 7,900 units?

Answer 1

1.

Sales (9,000 units)	279000	[9000*31]
Variable expenses	162000	[9000*18]
Contribution margin	117000
Fixed expenses	54700
Net operating income	62300

2.

Sales (8,800 units)	272800	[8800*31]
Variable expenses	158400	[8800*18]
Contribution margin	114400
Fixed expenses	54700
Net operating income	59700

3.

Sales (7,900 units)	244900	[7900*31]
Variable expenses	142200	[7900*18]
Contribution margin	102700
Fixed expenses	54700
Net operating income	48000