If the only change is that sales volume goes up by 40 units from 7500 to 7540, then the per-unit figures won't change, and we only need to worry about the total sales, total expenses, total contribution margin and net operating income.Since the per-unit revenue is $26.80 and we've sold 7540 units, our new total revenue is $202,072.Since the per-unit variable expenses are $17.20, our total variable expenses are $129,688.This means our...
If the only change is that sales volume goes up by 40 units from 7500 to 7540, then the per-unit figures won't change, and we only need to worry about the total sales, total expenses, total contribution margin and net operating income.
Since the per-unit revenue is $26.80 and we've sold 7540 units, our new total revenue is $202,072.
Since the per-unit variable expenses are $17.20, our total variable expenses are $129,688.
This means our total contribution margin is $72,384. (You can check that this is equal to the per-unit contribution $9.60 times 7540 units.)
Our fixed expenses are of course fixed at $54,100, so that leaves our net operating income, which is the contribution margin minus the fixed expenses, and therefore our net operating income is $18,284.
Putting it all together gives us our income statement:
Total Per Unit Sales (7,540 units) $ 202,072 $ 26.80 Variable expenses 129,688 17.20 Contribution margin 72,384 $ 9.60 Fixed expenses 54,100 Net operating income $ 18,284
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