Question

Whirly Corporation’s contribution format income statement for the most recent month is shown below: Total Per Unit Sales (7,400 units) $ 251,600 $ 34.00 Variable expenses 140,600 19.00 Contribution margin 111,000 $ 15.00 Fixed expenses 55,100 Net operating income $ 55,900 Required: (Consider each case independently): 1. What would be the revised net operating income per month if the sales volume increases by 70 units? 2. What would be the revised net operating income per month if the sales volume decreases by 70 units? 3. What would be the revised net operating income per month if the sales volume is 6,400 units?

Answer 1

Answer:

Whirly Corporation

1. Revised net operating income per month if the sales volume increases by 70 units:

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

                                             Total         Per Unit

Sales (7,470 units)       $ 253,980      $ 34.00

Variable expenses           141,930          19.00

Contribution margin        112,050       $ 15.00

Fixed expenses                 55,100

Net operating income $ 56,950

2. Revised net operating income per month if the sales volume decreases by 70 units:

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

                                             Total         Per Unit

Sales (7,330 units)       $ 249,220      $ 34.00

Variable expenses           139,270          19.00

Contribution margin        109,950       $ 15.00

Fixed expenses                 55,100

Net operating income  $ 54,850

3.  Revised net operating income per month if the sales volume is 6,400 units:

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

                                            Total         Per Unit

Sales (6,400 units)       $ 217,600      $ 34.00

Variable expenses           121,600          19.00

Contribution margin         96,000       $ 15.00

Fixed expenses                 55,100

Net operating income $ 40,900

Explanation:

a) Data and Calculations:

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

                                          Total         Per Unit

Sales (7,400 units)      $ 251,600      $ 34.00

Variable expenses         140,600          19.00

Contribution margin        111,000       $ 15.00

Fixed expenses               55,100

Net operating income $ 55,900