Question

In: Accounting

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

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

Total Per Unit
Sales (7,500 units) $ 240,000 $ 32.00
Variable expenses 150,000 20.00
Contribution margin 90,000 $ 12.00
Fixed expenses 55,600
Net operating income $ 34,400

Required:

(Consider each case independently):

1. What would be the revised net operating income per month if the sales volume increases by 80 units?

2. What would be the revised net operating income per month if the sales volume decreases by 80 units?

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

Solutions

Expert Solution

· Requirements asked

1

Revised Net Operating Income

$35,360

2

Revised Net Operating Income

$33,440

3

Revised Net Operating Income

$22,400

· Working

Requirement

1

2

3

A

Units

                                7,580

                       7,420

                  6,500

B = A x 32

Sales

$242,560

$237,440

$208,000

C = A x 20

Variable expenses

$151,600

$148,400

$130,000

D = B - C

Contribution margin

$90,960

$89,040

$78,000

E

Fixed expenses

$55,600

$55,600

$55,600

F = D - E

Revised Net Operating Income

$35,360

$33,440

$22,400


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