Question

Whirly Corporation’s contribution format income statement for the most recent month is shown below: Total Per Unit Sales (8,500 units) $ 280,500 $ 33.00 Variable expenses 161,500 19.00 Contribution margin 119,000 $ 14.00 Fixed expenses 55,100 Net operating income $ 63,900 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 7,500 units?

Answer 1

	Units	Per Unit	Total
SALES	8500	33	20500
Less : Variable Costs	8500	19	161500
Contribution Margin	8500	14	119000
Less : Fixed Costs			55100
Net Operating Income			63900
With change in volume fixed expenses will not change
				1
	Units	Per Unit	Total
SALES	8540	33	281820
Less : Variable Costs	8540	19	162260
Contribution Margin	8540	14	119560
Less : Fixed Costs			55100
Net Operating Income			64460
2
	Units	Per Unit	Total
SALES	8460	33	279180
Less : Variable Costs	8460	19	160740
Contribution Margin	8460	14	118440
Less : Fixed Costs			55100
Net Operating Income			63340
3
	Units	Per Unit	Total
SALES	7500	33	247500
Less : Variable Costs	7500	19	142500
Contribution Margin	7500	14	105000
Less : Fixed Costs			55100
Net Operating Income			49900