Question

Whirly Corporation’s contribution format income statement for the most recent month is shown below: Total Per Unit Sales (7,600 units) $ 235,600 $ 31.00 Variable expenses 144,400 19.00 Contribution margin 91,200 $ 12.00 Fixed expenses 54,100 Net operating income $ 37,100 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 6,600 units?

Answer 1

Answer:

Whirly Corporation

1. The revised net operating income per month if the sales volume increases by 80 units is:

= $38,060.

2. The revised net operating income per month if the sales volume decreases by 80 units is:

= $ 36,140

3. The revised net operating income per month if the sales volume is 6,600 units is:

= $ 25,100

Explanation:

a) Data and Calculations:

Whirly Corporation's Contribution Format Income Statement for the most recent month:

                                                            Total        Unit

Total Per Unit Sales (7,600 units) $ 235,600 $ 31.00

Variable expenses                             144,400    19.00

Contribution margin                            91,200 $ 12.00

Fixed expenses                                   54,100

Net operating income                      $ 37,100

1. Revised Net Operating Income per month with increased sales volume by 80:

                                                            Total        Unit

Total Per Unit Sales (7,680 units) $ 238,080 $ 31.00

Variable expenses                             145,920    19.00

Contribution margin                            92,160 $ 12.00

Fixed expenses                                   54,100

Net operating income                      $ 38,060

2. Revised Net Operating Income per month with decreased sales volume by 80:

                                                            Total        Unit

Total Per Unit Sales (7,520 units)  $ 233,120 $ 31.00

Variable expenses                             142,880    19.00

Contribution margin                           90,240 $ 12.00

Fixed expenses                                   54,100

Net operating income                      $ 36,140

3. The revised net operating income per month if the sales volume is 6,600 units:

                                                            Total        Unit

Total Per Unit Sales (6,600 units) $ 204,600 $ 31.00

Variable expenses                             125,400    19.00

Contribution margin                           79,200 $ 12.00

Fixed expenses                                   54,100

Net operating income                     $ 25,100