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 40 units?

2. What would be the revised net operating income per month if the sales volume decreases by 40 units?

3. What would be the revised net operating income per month if the sales volume is 6,500 units?

Total Per Unit Sales (7,500 units) $ 247,500 $ 33.00 Variable expenses 142,500 19.00 Contribution margin 105,000 $ 14.00 Fixed expenses 55,000 Net operating income $ 50,000

Explanation / Answer

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

Case 1 Case 2 Case 3 7540 units 7460units 6500 units Sales (33*7540)=$248820 (33*7460)=$246180 (33*6500)=$214500 Variable expenses (19*7540)=$143260 (19*7460)=$141740 (19*6500)=$123500 Contribution margin $105560 $104,440 $91000 Fixed expenses $55000 $55000 $55000 Revised net operating income $50560 $49440 $36000.

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