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 Sure Dynamic 5 710,000 $ 299,00 68% 745 Shot $ Total 1,000,000 Sales CM ratio Fixed expenses total $559,500 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 $49.000 a month, by how much would you expect the monthly net operating inkome to increase? Complete this question by entering your answers in the tabs below. 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).) Flight Dynamic Amount % $ 710,000 Sure Shot Amount % $ 290,000 Total Company Amount 1,000,000 Sales Variable expenses Contribution margin Fixed expenses Net operating income $ 710,000 0.00 % $ 290,000 0.00% 1.000.000 0.00% 1.000.000 Required 2 >

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Answer 1

1)				Flight Dynamic			Sure Shot			Total Company
				Amount	%		Amount	%		Amount	%
	Sales			$ 710,000.00	100.00%		$ 290,000.00	100.00%		$ 1,000,000.00	100%
Less:	Variable Expenses			$ 227,200.00	32.00%		$   75,400.00	26.00%		$    302,600.00	30.26%
	Contribution Margin			$ 482,800.00	68.00%		$ 214,600.00	74.00%		$    697,400.00	69.74%
Less:	Fixed Expenses									$    559,500.00
	Net Operating Income									$    137,900.00

2)	Break Even point in sales =			Fixed Expense / Cont. Margin %
			=	$ 559500 / 69.74%
			=	$      802,266

3)	Sales		$ 1,049,000.00
	Contribution Margin		$    731,572.60	($ 1049000 x 69.74%)
	Net Income		$    172,072.60	($ 731572.60 - $ 559500)
	Increase in Income		$            34,173	($ 172072.60 - $ 137900)