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 Oints Product Flight Sure Dynamic Shot $750,000 $250,000 67 B0% Total 1,000,000 $ Sales CM ratio Fixed expenses total $570,000 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 $48,000 a month, by how much would you expect the monthly net operating income to increase? Print Complete this question by entering your answers in the tabs below. References Required 1 Required 2 Required 3 Prepare a contribution format income statement for the company as a whole. (Round your percentage answers to 2 decimal places (.e. 0.1234 should be entered as 12,34).) Sure Shot Total Company Flight Dynamic Amount Amount Amount % Required 2 >

Answer 1

1)
	Olongapo Sports Corporation
	Flight Dynamic		Sure Shot		Total Company
	Amount	%	Amount	%	Amount	%
Sales=(A)	$                                                        7,50,000.00	100%	$    2,50,000.00	100%	$ 10,00,000.00	100.00%
Variable Expenses=(B)	$                                                        2,47,500.00	33%	$       50,000.00	20%	$    2,97,500.00	29.75%
Contribution Margin=(C )=(A)-(B)	$                                                        5,02,500.00	67%	$    2,00,000.00	80%	$    7,02,500.00	70.25%
Fixed Expenses=(D)					$    5,70,000.00
Net Operating Income=(C )-(D)					$    1,32,500.00
Contribution Margin=Sales-Variable cost
	Flight Dynamic	Sure shot
% of Variable Expenses	(100%-67%)=33%	(100%-80%)=20%
Variable Expenses	($750000*33%)	($250000*20%)
2)
	Break even Point in dollar sales based on current sales mix
	Fixed Cost=(A)	$         5,70,000.00
	Contribution Margin Ratio=(B)	70.25%
	Break even Point in dollar sales=(A)/(B)	$               8,11,388
3)	Increase Net Operating Income=(Increased Sales* Contribution Margin as a Company as a whole)
	Increased Sales=(A)	48000
	Contribution Margin Ratio=(B)	70.25%
	Net Operating Income increased by=(A)*(B)	$                  33,720