Exercise 6-1 (Algo) The Effect of Changes in Sales Volume on Net Operating Income (LO6-1] Whirly Corporation's contribution format income statement for the most recent month is shown below: Sales (8,800 units) Variable expenses Contribution margin Fixed expenses Net operating income Total $ 264,000 158, 408 105,600 55,600 $ 50,000 Per Unit $ 30.00 18.00 $ 12.00 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 7,800 units? 1. Rovised net operating income 2. Revised net operating income 3. Revised net operating income Exercise 6-4 (Algo) Computing and Using the CM Ratio (LO6-3) Last month when Holiday Creations, Incorporated, sold 38,000 units, total sales were $152,000, total variable expenses were $109,440, and fixed expenses were $36,700. 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 sales volume by 475 units and total sales by $1,900? (Do not round intermediate calculations.) % 1. Contribution margin ratio 2. Estimated change in net operating income Exercise 6-5 (Algo) 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: Percent Per Unit of Sales Selling price $ 50 100% Variable expenses 28 56 Contribution margin $ 22 449 Fixed expenses are $70,000 per month and the company is selling 4,000 units per month, Exercise 6-5 (Algo) Part 1 Required: 1-a. How much will net operating income increase (decrease) per month if the monthly advertising budget increases by $11,000, the monthly sales volume increases by 100 units, and the total monthly sales increase by $5,000? 1-5. Should the advertising budget be increased? Complete this question by entering your answers in the tabs below. Req 1A Reg 1B How much will net operating income increase (decrease) per month if the monthly advertising budget increases by $11,000, the monthly sales volume increases by 100 units, and the total monthly sales increase by $5,000? (Do not round intermediate calculations.) Net operating income Required information Exercise 6-5 (Algo) Changes in Variable Costs, Fixed Costs, Selling Price, and Volume (LO6-4) [The following information applies to the questions displayed below.) Data for Hermann Corporation are shown below: Selling price Variable expenses Contribution margin Percent Per Unit of Sales $ 50 100% 28 $ 22 44% 56 Fixed expenses are $70,000 per month and the company is selling 4,000 units per month Exercise 6-5 (Algo) Part 1 Required: 1-a. How much will net operating income increase (decrease) per month if the monthly advertising budget increases by $11,000 monthly sales volume increases by 100 units, and the total monthly sales increase by $5,000? 1-6. Should the advertising budget be increased? Complete this question by entering your answers in the tabs below. Req 1A Reg 1B Should the advertising budget be increased? Yes ONO
