Total Per Unit Sales (10,000 units). Variable expenses Contribution margin ... Fixed expenses.. $350,000 $ 35.00 200,000 20.00 150,000 $ 15.00 Net operating income 135,000 $ 15,000
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
The Effect of Changes in Activity on Net Operating Income
Whirly Corporation’s contribution format income statement for the most recent month is shown below:
Required:
(Consider each case independently):
1. What would be the revised net operating income per month if the sales volume increases by 100 units?
2. What would be the revised net operating income per month if the sales volume decreases by 100 units?
3. What would be the revised net operating income per month if the sales volume is 9,000 units?
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
