Question

Exercise 6-1 The Effect of Changes in Activity on Net Operating Income (LO6-1) Whirly Corporation's contribution format income statement for the most recent month is shown below: points Skipped Sales (8,100 units) Variable expenses Contribution margin Fixed expenses Net operating income Total $ 267,300 162,000 105,300 54,800 $ 50,500 Per Unit $ 33.00 20.00 $ 13.00 eBook Required: (Consider each case independently): Print 1. What would be the revised net operating income per month if the sales volume increases by 90 units? 2. What would be the revised net operating income per month if the sales volume decreases by 90 units? 3. What would be the revised net operating income per month if the sales volume is 7,100 units? References 1. Revised net operating income 2. Revised net operating income 3. Revised net operating income

Answer 1

Correct Answer:

1	Revised net operating income	$            51,670
2	Revised net operating income	$            49,330
3	Revised net operating income	$            37,500

Working:

	No. Of units	8190	8010	7100
A	Sales	$        2,70,270	$        2,64,330	$        2,34,300
B	Variable Expense	$        1,63,800	$        1,60,200	$        1,42,000
C =A-B	Contribution margin	$        1,06,470	$        1,04,130	$            92,300
D	Fixed Expenses	$            54,800	$            54,800	$            54,800
E C-D	Net operating income	$            51,670	$            49,330	$            37,500

End of answer.

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