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. Total Sales (8,5ee units) Variable expenses Contribution margin Fixed expenses Net operating income $ 297,500 170,000 127,500 55,100 $ 72,480 Per Unit $ 35.00 20.00 $ 15.00 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 of the sales volume decreases by 70 units? 3. What would be the revised net operating Income per month If the sales volume is 7,500 units? 1. Revised net operating income 2. Revised net operating income 3. Revised net operating income

Answer 1

Revised net operating income if the sales volume increased by 70 units

	Total	Per unit
Sales (8570 units)	2,99,950	35
Variable expenses	1,71,400	20
Contribution margin	1,28,550	15
Fixed expenses	55,100
Net operating income	73,450

Revised net operating income if the sales volume decreased by 70 units

	Total	Per unit
Sales (8430 units)	2,95,050	35
Variable expenses	1,68,600	20
Contribution margin	1,26,450	15
Fixed expenses	55,100
Net operating income	71,350

Revised net operating income if the sales volue is 7500 units

	Total	Per unit
Sales (7500 units)	2,62,500	35
Variable expenses	1,50,000	20
Contribution margin	1,12,500	15
Fixed expenses	55,100
Net operating income	57,400