Question

Whirly Corporation's contribution format income statement for the most recent month is shown below: Sales (8,600 units) Variable expenses Contribution margin Fixed expenses Net operating income Total $ 301,000 163,400 137,600 54,200 $ 83,400 Per Unit $ 35.00 19.00 $ 16.00 Required: (Consider each case independently): 1. What would be the revised net operating income per month if the sales volume increases by 30 units? 2. What would be the revised net operating income per month if the sales volume decreases by 30 units? 3. What would be the revised net operating income per month if the sales volume is 7,600 units?

Answer 1

1)	Net Operating income	83,880
2)	Net Operating income	82,920
3)	Net Operating income	67,400
		Case 1			Case 2
	Original Net Income	83,400		Original Net Income	83,400
	Increase in sales Unit	30		Decrease in sales Unit	(30)
	Contribution per Unit	16		Contribution per Unit	16
	Increase in contribution in total	480		Change in contribution in total	(480)
	Revised net operating income	83,880		Revised net operating income	82,920
		Case 3
	Original Net Income	83,400
	Decrease in sales Unit	(1,000)	(8600-7600)
	Contribution per Unit	16
	Change in contribution in total	(16,000)
	Revised net operating income	67,400