Question

Exercise 6-1 The Effect of Changes in Activity on Net Operating Income (L06-1] Whirly Corporation's contribution format income statement for the most recent month is shown below: Sales (7,200 units) Variable expenses Contribution margin Fixed expenses Net operating income Total $ 237,600 136,800 100,800 55,900 $ 44,900 Per Unit $ 33.00 19.00 $ 14.00 Required: (Consider each case independently): 1. What would be the revised net operating income per month if the sales volume increases by 60 units? 2. What would be the revised net operating income per month if the sales volume decreases by 60 units? 3. What would be the revised net operating income per month if the sales volume is 6,200 units? 1. Revised net operating income 2. Revised net operating income 3. Revised net operating income

Answer 1

1.

	Total	Per unit
Sales (7,260 units)	239,580	33
Variable expense	137,940	19
Contribution margin	101,640	14
Fixed expenses	55,900
Net operating income	$45,740

2.

	Total	Per unit
Sales (7,140 units)	235,620	33
Variable expense	135,660	19
Contribution margin	99,960	14
Fixed expenses	55,900
Net operating income	$44,060

3.

	Total	Per unit
Sales (6,200 units)	204,600	33
Variable expense	117,800	19
Contribution margin	86,800	14
Fixed expenses	55,900
Net operating income	$30,900

1.	Revised net operating income	$45,740
2.	Revised net operating income	$44,060
3.	Revised net operating income	$30,900

Kindly comment if you need further assistance. Thanks‼!

Kindly comment if you need further assistance. Thanks‼!