MHE Reades Homework Saved Whirly Corporation\'s contribution format income state
ID: 2339643 • Letter: M
Question
MHE Reades Homework Saved Whirly Corporation's contribution format income statement for the most recent month is shown below Total Per Unit Sales (8,100 units) Variable expenses Contribution margin Fixed expenses Bet operating income 251,100 31.00 19.00 153,900 97,200 12.00 54,600 42,600 1:53 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 7,100 units? Print 1. Revised net operating income 2-Revised not operatinginoome 3Revised net operating income 1 of 4 l Next > 19 20 FSExplanation / Answer
In the given question the contribution margin (Sales Price - Variable Expenses) is $12 per Unit.
The Fixed Expenses will be the same irrespective of the number of units sold.
To arrive at the operating income at different sales level we need to multiply the number of units sold during the month by the contribution margin per unit and deduct the total fixed expenses for the month.
Hence the net operating income would be as follows:
1. When the monthly sales increases by 40 units.
Sales = 8100 + 40 = 8140.
Hence, total contribution = 8140 units x 12 per unit = $ 97,680
Less: Fixed Expenses $ 54,600
Net Operating Income $ 43,080
2. When the monthly sales decreases by 40 units
Sales = 8100 - 40 = 8060.
Hence, total contribution = 8060 units x 12 per unit = $ 96,720
Less: Fixed Expenses $ 54,600
Net Operating Income $ 42,120
3. When the monthly sales is 7100 units
Hence, total contribution = 7100 units x 12 per unit = $ 85,200
Less: Fixed Expenses $ 54,600
Net Operating Income $ 30,600
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