Question

Olongapo Sports Corporation distributes two premium golf balls—the Flight Dynamic and the Sure Shot. Monthly sales and the contribution margin ratios for the two products follow:

Product

Flight Dynamic Sure Shot Total
  Sales $150,000      $250,000      $400,000
  CM ratio 80% 36% ?

Fixed expenses total $183,750 per month.

Required:
1.

Prepare a contribution format income statement for the company as a whole. Round your percentage answers to 2 decimal places (i.e. .1234 is considered as 12.34).

     

2.

Compute the break-even point for the company based on the current sales mix.

     

3.

If sales increase by $100,000 a month, by how much would you expect net operating income to increase?

     

Answer 1