Question

Whirly Corporation’s contribution format income statement for the most recent month is shown below: Total Per Unit Sales (10,000 units) $ 350,000 $ 35.00 Variable expenses 200,000 20.00 Contribution margin 150,000 $ 15.00 Fixed expenses 135,000 Net operating income $ 15,000 What would be the revised net operating income per month if the sales volume increases by 100 units?

Answer 1

Answer: $16500

Explanation:

Given that,

Total Sales (10,000 units) = $350,000

Total Variable expenses = 200,000

Total Contribution margin = 150,000  

Fixed expenses = 135,000

Net operating income = $15,000

If sales volume increases by 100 units, then total units sold = 10,100 units

So,

Total sales = 10100 × $35 = $353,500

Total variable Expenses = 10100 × $20 = $202,000

Contribution Margin = Total sales - Total variable Expenses

= 353500 - 202000

=151500

∴ Revised net operating income = Contribution Margin - Fixed expenses

= 151500 - 135,000

= $16,500

Answer 2

Answer:

Current Sales = 10,000 unis

Sales after volume increases by 100 units = 10,000 + 100

= 10,100

                Whirly Corporation's Contribution Format Income Statement

Sales revenue ( 10,100 units @ $ 35 per unit)                      $ 353,500

- Variable expenses ( 10,100 @ $ 20 per unit)                     $ 202,000

Contribution Margin ( 10,100 @ $ 15 per unit)                      $ 151,500

- Fixed expenses                                                                   $ 135,000

Net Operating Income per month                                        $ 16,500

Explanation:

Refer to the answer.