Question

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

	Total			Per Unit
Sales (8,400 units)	$	294,000		$	35.00
Variable expenses		151,200			18.00
Contribution margin		142,800		$	17.00
Fixed expenses		55,100
Net operating income	$	87,700

Required:

(Consider each case independently):

1. What would be the revised net operating income per month if the sales volume increases by 70 units?

2. What would be the revised net operating income per month if the sales volume decreases by 70 units?

3. What would be the revised net operating income per month if the sales volume is 7,400 units?

Answer 1

Ans: Whirly corporation

Contribution format Income Statement:

Particulars		1Ans	2Ans	3Ans
	Per unit cost $	8,470 Units Amount $	8,330 Units Amount $	7,400 Units Amount $
Sales	35
- Variable expenses	18
Contribution margin	17	143,990	141,610	125,800
- Fixed expenses		55,100	55,100	55,100
Net operating income		88,890	86,510	70,700

Contribution margin = Uniit contribution margin * Units sold

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