Question

Whirly corporation most recent income statement is shown below:

Total Per Unit

Sales (7,600 units) 243,200 32.00

Variable Expenses 144,400 19.00

Contribution Margin 98,800

Fixed Expenses 55,300

Net Operating Income 43,500

Required:

Prepare a new contribution format income statement under each of the following conditions (consider each case independently):

1. The sales volume increases by 60 units

2. The Sales Volume decreases by 60 units

3. The Sales Volume is 6,600

Answer 1

1	Revised net operating income at when units increased by 60	$      44,280.00
2	Revised net operating income at when units decreased by 60	$      42,720.00
3	Revised net operating income when sales volume is 6600 units	$      30,500.00

Contribution margin income statement
			Per unit	Total at 7660 units	Total at 7540 units	Total at 6600 units
Sales			$     32.00	$ 2,45,120.00	$ 2,41,280.00	$ 2,11,200.00
Variable cost			$     19.00	$ 1,45,540.00	$ 1,43,260.00	$ 1,25,400.00
Contribution margin			$     13.00	$      99,580.00	$      98,020.00	$      85,800.00
Fixed expenses				$      55,300.00	$      55,300.00	$      55,300.00
Net operating income				$      44,280.00	$      42,720.00	$      30,500.00