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:

Required:

(Consider each case independently):

1. What would be the revised net operating income per month if the sales volume increases by 80 units?

2. What would be the revised net operating income per month if the sales volume decreases by 80 units?

3. What would be the revised net operating income per month if the sales volume is 7,900 units?

Total Per Unit Sales (8,900 units) $ 302,600 $ 34.00 Variable expenses 169,100 19.00 Contribution margin 133,500 $ 15.00 Fixed expenses 54,600 Net operating income $ 78,900

Explanation / Answer

NOTE:Total fixed costs and variable cost per unit do not change with change in units.

Case 1 Case 2 Case 3 Sales (8900+80)*34=$305,320 (8900-80)*34=$299,880 (7900*34)=$268,600 Variable expenses (8900+80)*19=$170620 (8900-80)*19=$167580 (7900*19)=$150100 Contribution margin $134700 $132300 $118,500 Fixed expenses 54600 54600 54600 Net operating income $80,100 $77,700 $63,900.

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