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		54,800
Net operating income	$	65,200

Required:

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

		8000 Units	PU
	Sales	272000	34.00
	Less: Variable Costs	152000	19.00
	Contribution Margin	120000	15.00
	Less: Fixed Costs	54800
	Net Operating Income	65200
		Units
		8080	7920	7000		8080	7920	7000
	Sales	274720	269280	238000		8080*34	7920*34	7000*34
	Less: Variable Costs	153520	150480	133000		8080*19	7920*19	7000*19
	Contribution Margin	121200	118800	105000
	Less: Fixed Costs	54800	54800	54800
	Net Operating Income	66400	64000	50200