Question

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

	Total			Per Unit
Sales (7,600 units)	$	250,800		$	33.00
Variable expenses		144,400			19.00
Contribution margin		106,400		$	14.00
Fixed expenses		55,100
Net operating income	$	51,300

Required:

(Consider each case independently):

1. What would be the revised net operating income per month if the sales volume increases by 40 units?

2. What would be the revised net operating income per month if the sales volume decreases by 40 units?

3. What would be the revised net operating income per month if the sales volume is 6,600 units?

1.Revised net operating income________

2.Revised net operating income_________

3.Revised net operating income_________

Answer 1

	Per Unit	Original	1	2	3
Units sold		7600	7640	7540	6600
			(7600+40)	(7600-40)
Sales	$33.00	$250,800	$252,120	$248,820	$217,800
			(7640*33)	(7540*33)	(6600*33)
Variable expenses	$19.00	$144,400	$145,160	$143,260	$125,400
			(7640*19)	(7540*19)	(6600*19)
Contribution margin	$14.00	$106,400	$106,960	$105,560	$92,400
Fixed expenses		$55,100	$55,100	$55,100	$55,100
Net operating income		$51,300	$51,860	$50,460	$37,300