Whirly Corporation’s contribution format income statement for
the most recent month is shown below:
| Total | Per Unit | |||||
| Sales (7,500 units) |
$ | 255,000 | $ | 34.00 | ||
| Variable expenses | 142,500 | 19.00 | ||||
| Contribution margin | 112,500 | $ | 15.00 | |||
| Fixed expenses | 54,600 | |||||
| Net operating income | $ | 57,900 | ||||
Required:
(Consider each case independently):
1. What would be the revised net operating income per month if
the sales volume increases by 50 units?
2. What would be the revised net operating income per month if
the sales volume decreases by 50 units?
3. What would be the revised net operating income per month if
the sales volume is 6,500 units?
Answer
Calculation of revised net operating income per month
if
1. The sales volume increases by 50 units.
Sales total (7,550 X $34) $256,700
Less: Variable expenses (7,550 X $19) $143,450
Contribution margin $113,250
Less: Fixed expenses $54,600
Net operating income $58,650
2. The sales volume decreases by 50 units.
Sales total (7,450 X $34) $253,300
Less: Variable expenses (7,450 X $19) $141,550
Contribution margin $111,750
Less: Fixed expenses $54,600
Net operating income $57,150
3. The sales volume is 6,500 units.
Sales total (6,500 X $34) $221,000
Less: Variable expenses (6,500 X $19) $123,500
Contribution margin $97,500
Less: Fixed expenses $54,600
Net operating income $42,900