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Exercise 5-1 The Effect of Changes in Activity on Net Operating Income (L05-1) Whirly Corporation's contribution...

Question:

Exercise 5-1 The Effect of Changes in Activity on Net Operating Income (L05-1) Whirly Corporations contribution format incom
Exercise 5-1 The Effect of Changes in Activity on Net Operating Income (L05-1) Whirly Corporation's contribution format income statement for the most recent month is shown below: Sales (7,400 units) Variable expenses Contribution margin Fixed expenses Net operating income Total $ 259,000 133,200 125,800 55,700 $ 70,100 Per Unit $ 35.00 18.00 $ 17.00 Required: (Consider each case independently): 1. What would be the revised net operating income per month I the sales volume increases by 90 units? 2. What would be the revised net operating income per month the sales volume decreases by 90 units? 3. What would be the revised net operating income per month if the sales volume is 6,400 units? 1. Revised net operating income 2. Revised net operating income 3. Revised net operating income

Answers

case 1) compute net operating income, if sales volume increases by 90units

Particular per unit amount ($)
Sales(7400+90)7490units $35 262150
(-) variable cost $18 (134820)
CONTRIBUTION $17 127330
(-) fixed expenses (55700)
NET OPERATING INCOME 71630

case 2) compute net operating income,if sales volume decrease by 90units

Particular per unit amount ($)
Sales(7400-90)7310units $35 255850
(-) variable expenses $18 (131580)
CONTRIBUTION $17 124270
(-) fixed expenses (55700)
NET OPERATING INCOME 68570

Case 3) compute net operating income,if sale volume is 6400units

Particular per unit amount ($)
Sales (6400) unit's $35 224000
(-) variable expenses $18 (115200)
CONTRIBUTION $17 108800
(-) fixed expenses (55700)
NET OPERATING INCOME 53100

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