Question

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

	Total			Per Unit
Sales (7,600 units)	$	243,200		$	32.00
Variable expenses		144,400			19.00
Contribution margin		98,800		$	13.00
Fixed expenses		55,700
Net operating income	$	43,100

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 6,600 units?

Answer 1

Requirement 1

Income statement
If sales Units increase by 50 per month
Sales (7,650 units)	$ 2,44,800.00
Variable expenses	$ 1,45,350.00
Contribution margin	$      99,450.00
Fixed expenses	$      55,700.00
Net operating income	$      43,750.00

Revised net operating income per month if the sales volume increases by 50 units= $ 43,750

.

Requirement 2

Income statement
If sales Units Decrease by 50 per month
Sales (7,550 units)	$ 2,41,600.00
Variable expenses	$ 1,43,450.00
Contribution margin	$      98,150.00
Fixed expenses	$      55,700.00
Net operating income	$      42,450.00

Revised net operating income per month if the sales volume decreases by 50 units= $ 42,450

.

Requirement 3

Income statement
If sales Units becomes 6600 Per month
Sales (6600 units)	$ 2,11,200.00
Variable expenses	$ 1,25,400.00
Contribution margin	$      85,800.00
Fixed expenses	$      55,700.00
Net operating income	$      30,100.00

Revised net operating income per month if the sales volume is 6,600 units =$30100