Homework SourseWhirly Corporations contribution format income statement for
Whirly Corporation’s contribution format income statement for the most recent month is shown below:
Required:
(Consider each case independently):
1. What would be the revised net operating income per month if the sales volume increases by 40 units?
2. What would be the revised net operating income per month if the sales volume decreases by 40 units?
3. What would be the revised net operating income per month if the sales volume is 6,500 units?
| Total | Per Unit | |||||
| Sales (7,500 units) | $ | 247,500 | $ | 33.00 | ||
| Variable expenses | 142,500 | 19.00 | ||||
| Contribution margin | 105,000 | $ | 14.00 | |||
| Fixed expenses | 55,000 | |||||
| Net operating income | $ | 50,000 | ||||
Solution
NOTE:Total fixed cost and variable cost per unit do not change with change in units.
| Case 1 | Case 2 | Case 3 | |
| 7540 units | 7460units | 6500 units | |
| Sales | (33*7540)=$248820 | (33*7460)=$246180 | (33*6500)=$214500 |
| Variable expenses | (19*7540)=$143260 | (19*7460)=$141740 | (19*6500)=$123500 |
| Contribution margin | $105560 | $104,440 | $91000 |
| Fixed expenses | $55000 | $55000 | $55000 |
| Revised net operating income | $50560 | $49440 | $36000. |
