2) The sales volume decreases by 90 units. 3) The sales volume is 7,400 units. E

Question

2) The sales volume decreases by 90 units.

3) The sales volume is 7,400 units.

Exercise 5-1 Preparing a Contribution Format Income Statement [LO5-1] Whirly Corporation's most recent income statement is shown below: Total Per Unit $285,600 $34.00 Sales (8,400 units) Variable expenses 168,000 20.00 Contribution margin Fixed expenses 117,600 $14.00 54,900 Net operating income $ 62,700 Required Prepare a new contribution format income statement under each of the following conditions (consider each case independently):

Explanation / Answer

1) Sales volume increases by 90 units ie Sales unit = 8,490 units

2) Sales volume decreases by 90 units ie Sales unit = 8,310 units

3) Sales volume = 7,400 units

Whirly corporation Contibution Income Statement Total ($) Per unit ($) Sales ( 8,490 units) 288,660 34.00 Variable expenses 169,800 20.00 Contribution margin 118,860 14.00 Fixed Expenses 54,900 Net operating income 63,960

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