Question

Whirly Corporation’s contribution format income statement for the most recent month is shown below: Total Per Unit Sales (7,600 units) $ 250,800 $ 33.00 Variable expenses 144,400 19.00 Contribution margin 106,400 $ 14.00 Fixed expenses 54,800 Net operating income $ 51,600 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 6,600 units?

Answer 1

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

Sales total (7,670*$33) $253,110

Less: Variable expenses (7,670*$19) $145,730

Contribution margin $107,380

Less: Fixed expenses $54,800

Net operating income $52,580

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

Sales total (7530*$33) $248,490

Less: Variable expenses (7530*$19) $143,070

Contribution margin $105,420

Less: Fixed expenses $54,800

Net operating income $50,620

3. What would be the revised net operating income per month if the sales volume is 6,600 units?

Sales total (6,600*$33) $217,800

Less: Variable expenses (6,600*$19) $125,400

Contribution margin $92,400

Less: Fixed expenses $54,800

Net operating income $37,600