Question

Whirly Corporation's contribution format income statement for the most recent month is shown below: Sales (8,400 units) Variable expenses Contribution margin Fixed expenses Net operating income Total $ 268,800 159,600 109,200 55,700 $ 53,500 Per Unit $ 32.00 19.00 $ 13.00 Required: (Consider each case independently): 1. What would be the revised net operating income per month if the sales volume increases by 100 units? 2. What would be the revised net operating income per month if the sales volume decreases by 100 units? 3. What would be the revised net operating income per month if the sales volume is 7,400 units? 1. Revised net operating income 2. Revised net operating income 3. Revised net operating income

Answer 1

--Requirements

1	Revised Net Operating Income	$54,800
2	Revised Net Operating Income	$52,200
3	Revised Net Operating Income	$40,500

--Working

	Requirement	1	2	3
A	Units	8,500	8,300	7,400
B = A x $ 32	Sales	$272,000	$265,600	$236,800
C = A x $ 19	Variable expenses	$161,500	$157,700	$140,600
D = B - C	Contribution margin	$110,500	$107,900	$96,200
E	Fixed expenses	$55,700	$55,700	$55,700
F = D - E	Revised Net Operating Income	$54,800	$52,200	$40,500