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Exercise 6-1 The Effect of Changes in Activity on Net Operating Income (L06-1] Whirly Corporation's contribution format income statement for the most recent month is shown below Sales (8.100 units) Variable expenses Contribution margin Fixed expenses Nes operating income Total $ 259.200 145,800 113,400 55,100 5 58,300 Per Unit $ 32.00 18.00 $ 14.00 Required: (Consider each case independently) What would be the revised net operating income per month if the sales volume increases by 70 units? 2. What would be the revised net operating income per month if the sales volume decreases by 70 units? 3 What would be the revised net operating income per month if the sales volume is 7100 units? Revised net operating income 2 Revised net operating income 3. Revised not operating income Exercise 6-4 Computing and using the CM Ratio (L06-3) Last month when Holiday Creations, Inc., sold 38.000 units, total sales were $315,000, total variable expenses were $242,550, and fixed expenses were $39,600. Required: 1. What is the company's contribution margin (CM) ratio? 2. What is the estimated change in the company's net operating income if it can increase total sales by $2,600? (Do not round Intermediate calculations.) 1. Contribution margin ratio 2. Estimated change in net operating income Required information Exercise 6-5 Changes in Variable Costs, Fixed Costs, Selling Price, and Volume (L06-4) The following information applies to the questions displayed below) Data for Hermann Corporation are shown below Selling price Variable expenses Contribution margin Per Unit $ 140 93 $ 49 Percent of Sales 100% 65 35% Fixed expenses are $88,000 per month and the company is selling 3.000 units per month. Exercise 6-5 Part 1 Required: 1-a. How much will net operating income increase (decrease) per month if the monthly advertising budget increases by $9,300 and monthly sales increase by $21,000? 1-b. Should the advertising budget be increased? Complete this question by entering your answers in the tabs below. Req IA Reg 1B How much will net operating income increase (decrease) per month if the monthly advertising budget increases by $9,300 and monthly sales increase by $21,000? (Round any unit calculations up to the nearest whole unit.) Not operating income by ROGA Req 1B > Exercise 6-5 Part 2 2-a. Refer to the original data. How much will net operating income increase (decrease) per month if the company uses higher quality components that increase the variable expense by $6 per unit and increase unit sales by 20%. 2-5. Should the higher quality components be used? Complete this question by entering your answers in the tabs below. Reg 2A Req 28 Refer to the original data. How much will net operating income increase (decrease) per month if the company uses higher- quality components that increase the variable expense by $6 per unit and increase unit sales by 20%. Not operating income by Req 2B >
