Olongapo Sports Corporation is the distributor in the Philippines of two premium golf balls—the FlightDynamic and the Sure Shot. Monthly sales, expressed in pesos (P), and the contribution margin ratios forthe two products follow:ProductFlight Dynamic Sure Shot TotalSales ......................................... P150,000 P250,000 P400,000CM ratio .................................... 80% 36% ?Fixed expenses total P183,750 per month.Required:1. Prepare a contribution format income statement for the company as a whole. Carry computations toone decimal place.2. Compute the break-even point for the company based on the current sales mix.3. If sales increase by P100,000 a month, by how much would you expect net operating income toincrease? What are your assumptions?
Olongapo Sports Corporation is the distributor in the Philippines of two premium golf balls—the Flight
Dynamic and the Sure Shot. Monthly sales, expressed in pesos (P), and the contribution margin ratios for
the two products follow:
Product
Flight Dynamic Sure Shot Total
Sales ......................................... P150,000 P250,000 P400,000
CM ratio .................................... 80% 36% ?
Fixed expenses total P183,750 per month.
Required:
1. Prepare a contribution format income statement for the company as a whole. Carry computations to
one decimal place.
2. Compute the break-even point for the company based on the current sales mix.
3. If sales increase by P100,000 a month, by how much would you expect net operating income to
increase? What are your assumptions?
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