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

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

	Total			Per Unit
Sales (7,100 units)	$	234,300		$	33.00
Variable expenses		142,000			20.00
Contribution margin		92,300		$	13.00
Fixed expenses		54,000
Net operating income	$	38,300

Required:

(Consider each case independently):

1. What would be the revised net operating income per month if the sales volume increases by 90 units?

2. What would be the revised net operating income per month if the sales volume decreases by 90 units?

3. What would be the revised net operating income per month if the sales volume is 6,100 units?

Answer

Explanation

1.

The revised net operating income would be:

	Total			Per Unit
Sales (7,190 units)	$	237,270		$	33.00
Variable expenses		143,800			20.00
Contribution margin		93,470		$	13.00
Fixed expenses		54,000
Net operating income	$	39,470

2.

The revised net operating income would be:

	Total			Per Unit
Sales (7,010 units)	$	231,330		$	33.00
Variable expenses		140,200			20.00
Contribution margin		91,130		$	13.00
Fixed expenses		54,000
Net operating income	$	37,130

3.

The revised net operating income would be:

	Total			Per Unit
Sales (6,100 units)	$	201,300		$	33.00
Variable expenses		122,000			20.00
Contribution margin		79,300		$	13.00
Fixed expenses		54,000
Net operating income	$	25,300