Question

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

	Total			Per Unit
Sales (9,000 units)	$	306,000		$	34.00
Variable expenses		171,000			19.00
Contribution margin		135,000		$	15.00
Fixed expenses		54,500
Net operating income	$	80,500

Required:

(Consider each case independently):

1. What would be the revised net operating income per month if the sales volume increases by 50 units?

2. What would be the revised net operating income per month if the sales volume decreases by 50 units?

3. What would be the revised net operating income per month if the sales volume is 8,000 units?

Answer 1

1
	Total	Per unit
Sales (9050 units)	307700	34
Variable expenses	171950	19
Contribution margin	135750	15
Fixed expenses	54500
Revised Net operating income	81250
2
	Total	Per unit
Sales (8950 units)	304300	34
Variable expenses	170050	19
Contribution margin	134250	15
Fixed expenses	54500
Revised Net operating income	79750
3
	Total	Per unit
Sales (8000 units)	272000	34
Variable expenses	152000	19
Contribution margin	120000	15
Fixed expenses	54500
Revised Net operating income	65500