Whirly Corporation’s contribution format income statement for the most recent mo

Question

Whirly Corporation’s contribution format income statement for the most recent month is shown below: Total Per Unit Sales (9,000 units) $ 279,000 $ 31.00 Variable expenses 171,000 19.00 Contribution margin 108,000 $ 12.00 Fixed expenses 54,600 Net operating income $ 53,400 Required: (Consider each case independently): 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 8,000 units?

Explanation / Answer

NOTE:Variable expenses per unit and total fixed costs do not change with change in units.

Case 1 Case 2 Case 3 Sales (9000+90)*31=$281790 (9000-90)*31=$276210 (8000*31)=$248000 Variable expenses (9000+90)*19=$172710 (9000-90)*19=$169290 (8000*19)=$152000 Contribution margin $109080 $106920 $96000 Fixed expenses 54600 54600 54600 Net operating income $54480 $52320 $41400.

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