Question

Whirly Corporation’s contribution format income statement for the most recent month is shown below:

	Total			Per Unit
Sales (7,300 units)	$	248,200		$	34.00
Variable expenses		131,400			18.00
Contribution margin		116,800		$	16.00
Fixed expenses		55,600
Net operating income	$	61,200

Required:

(Consider each case independently):

1. What would be the revised net operating income per month if the sales volume increases by 50 units?

2. What would be the revised net operating income per month if the sales volume decreases by 50 units?

3. What would be the revised net operating income per month if the sales volume is 6,300 units?

Answer 1

Solution 1:

Whirly Corporation
Contribution margin income statement (7350 units)
Particulars	Per unit	Amount
Sales	$34.00	$249,900.00
Variable cost	$18.00	$132,300.00
Contribution margin	$16.00	$117,600.00
Fixed expenses		$55,600.00
Net Operating income		$62,000.00

Solution 2:

Whirly Corporation
Contribution margin income statement (7250 units)
Particulars	Per unit	Amount
Sales	$34.00	$246,500.00
Variable cost	$18.00	$130,500.00
Contribution margin	$16.00	$116,000.00
Fixed expenses		$55,600.00
Net Operating income		$60,400.00

Solution 3:

Whirly Corporation
Contribution margin income statement (6300 units)
Particulars	Per unit	Amount
Sales	$34.00	$214,200.00
Variable cost	$18.00	$113,400.00
Contribution margin	$16.00	$100,800.00
Fixed expenses		$55,600.00
Net Operating income		$45,200.00