Whirly Corporation\'s contribution format income statement for the most recent m

Question

Whirly Corporation's contribution format income statement for the most recent month is shown below: Per Unit $34.00 18.00 16.00 Total Sales (8,000 units) Variable expenses Contribution margin Fixed expenses Net operating income $ 272,000 144,000 128,000 55,600 $ 72,400 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 7,000 units? 1.Revised net operating income 2. Revised net operating income 3. Revised net operating income

Explanation / Answer

1) Contribution Format Income Statement Units= 8000+80= 8080 units Particulars Total Per unit Sales(8080*34) 2,74,720 34 Variable cost(8080*18) 1,45,440 18 Contribution margin(Sales - Variable Cost) 1,29,280 16 Fixed expenses 55,600 Net operating income 73,680 2) Contribution Format Income Statement Units= 8000-80=7920 units Particulars Total Per unit Sales(7920*34) 2,69,280 34 Variable cost(7920*18) 1,42,560 18 Contribution margin(Sales - Variable Cost) 1,26,720 16 Fixed expenses 55,600 Net operating income 71,120 3) Contribution Format Income Statement Particulars Total Per unit Sales(7000*34) 2,38,000 34 Variable cost(7000*18) 1,26,000 18 Contribution margin(Sales - Variable Cost) 1,12,000 16 Fixed expenses 55,600 Net operating income 56,400

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