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	$	660,000		$	340,000		$	1,000,000
CM ratio		61	%		77	%		?

Fixed expenses total $594,500 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 $53,000 a month, by how much would you expect the monthly net operating income to increase?

• Required 1

Prepare a contribution format income statement for the company as a whole. (Round your percentage answers to 2 decimal places (i.e. 0.1234 should be entered as 12.34).)

	Flight Dynamic			Sure Shot			Total Company
	Amount	%		Amount	%		Amount	%
Sales			%			%	0		%
Variable expenses			%			%	0		%
Contribution margin	$0	0.00	%	$0	0.00	%	0	0.00	%
Fixed expenses
Net operating income							$0	.

• Required 2

What is the company's break-even point in dollar sales based on the current sales mix? (Do not round intermediate calculations. Round your answer to the nearest whole dollar amount.)

Break-even point in sales

• Required 3

If sales increase by $53,000 a month, by how much would you expect the monthly net operating income to increase? (Do not round intermediate calculations. Round your answer to the nearest whole dollar amount.)

Net operating income increases by

Answer 1

Solutions:

Requirement 1

Requirement 2

Requirement 3

Net operating income increases by

$ 35713

Hope this helps! In case of any clarifications, kindly use the comment box below