Question

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

	Total			Per Unit
Sales (8,000 units)	$	272,000		$	34.00
Variable expenses		152,000			19.00
Contribution margin		120,000		$	15.00
Fixed expenses		54,000
Net operating income	$	66,000

Required:

(Consider each case independently):

1. What would be the revised net operating income per month if the sales volume increases by 80 units?

2. What would be the revised net operating income per month if the sales volume decreases by 80 units?

3. What would be the revised net operating income per month if the sales volume is 7,000 units?

Answer 1

1)		Contribution income statement
				total	per unit
	Sales			274720	34
	Variable expense			153520	19
	Contribution margin			121200	15
	Fixed expense			54,000
	Net operating income			67,200
	(sales volume = 8,000+80=			8080	)
2)		Contribution income statement
				total	per unit
	Sales	(7,620 units)		269280	34
	Variable expense			150480	19
	Contribution margin			118800	15
	Fixed expense			54,000
	Net operating income			64,800
	(sales volume = 8,000-80 =			7920	)
3)		Contribution income statement
				total	per unit
	Sales			238000	34
	Variable expense			133000	19
	Contribution margin			105000	15
	Fixed expense			54,000
	Net operating income			51,000
	Sales volume =		7000	units