Question

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

		Product
		Flight Dynamic			Sure Shot			Total
Sales	$	700,000		$	300,000		$	1,000,000
CM ratio		62	%		75	%		?

Fixed expenses total $573,000 per month.

Required:

1. Prepare a contribution format income statement for the company as a whole.

2. What is the company's break-even point in dollar sales based on the current sales mix?

3. If sales increase by $43,000 a month, by how much would you expect the monthly net operating income to increase?

Answer 1