Question

Whirly Corporation’s contribution format income statement for the most recent month is shown below: Total Per Unit Sales (7,100 units) $ 248,500 $ 35.00 Variable expenses 134,900 19.00 Contribution margin 113,600 $ 16.00 Fixed expenses 55,800 Net operating income $ 57,800 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 6,100 units?

Answer 1

1. Particulars Amount

Sales total (7,150 * $35) $250,250

Less: Variable expenses (7,150 * $19) $135,850

Contribution margin $114,400

Less: Fixed expenses $55,800

Net operating income $ 58,600

2. Particulars Amount

Sales total (7,050 * $35) $246,750

Less: Variable expenses (7,050 * $19) $133,950

Contribution margin $112,800

Less: Fixed expenses $55,800

Net operating income $ 57,000

3. Particulars Amount

Sales total (6,100* $35) $213,500

Less: Variable expenses (6,100 * $19) $115,900

Contribution margin $97,600

Less: Fixed expenses $55,800

Net operating income $ 41,800