ezto.mheducation com Chapter 5 Homework Chapter 5 Homework Chapter 5 Homework Ch
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ezto.mheducation com Chapter 5 Homework Chapter 5 Homework Chapter 5 Homework Chapter 5 Homework Accounting questionl value: 10.00 points Olongapo Sports Corporation distributes two premium golf balls-the Flight Dynamic and the Sure Shot Monthly sales and the contribution margin ratios for the two products follow Sure Shot $260,000 $1,000,000 Total Flight Dynamic $740,000 Sales CM ratio 64% 15% Fixed expenses total $578,500 per month Required 1. Prepare a contribution format income statement for the company as a whole. Round your percentage answers to 2 decimal places (i.e. .1234 is considered as 12.34) Olongapo Sports Corporation Flight Dynamic Sure Shot Total Company Amount Amount 0.00 | % | $ 0 0.00 % 0.001% 2. Compute the break-even point for the company based on the current sales mix. (Do not round intermediate calculations. Round your answer to the nearest whole dollar amount.) k-even point in salesExplanation / Answer
Solution:
Part 1 & Part 2
Olongapo Sports Corporation
Contribution Income Statement
Flight Dynamic
Sure Shot
Total Company
Amount
%
Amount
%
Amount
%
Sales
$740,000
100%
$260,000
100%
$1,000,000
100.00%
Variable Expenses
$266,400
36%
$65,000
25%
$331,400
33.14%
Contribution Margin (Sales x CM Ratio)
$473,600
64%
$195,000
75%
$668,600
66.86%
Fixed Expenses
$578,500
Net Operating Income
$90,100
Break Even Point in dollar sales
For Company
Total Fixed Expenses
$578,500
Weighted Avg contribution margin ratio
(From Income Statement)
66.86%
Break Even Point in dollars
(Total Fixed Expenses / Contribution Margin Ratio)
$865,241
Part 3 ---- Assumed that increase in sales as a whole for the company not for specific product.
The Net Operating Income will be increased by the contribution margin since the total fixed cost will not change.
Increase in Net Operating Income = Increase in Sales x CM Ratio of the company as a whole
= $53,000*66.86%
= $35,436
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Olongapo Sports Corporation
Contribution Income Statement
Flight Dynamic
Sure Shot
Total Company
Amount
%
Amount
%
Amount
%
Sales
$740,000
100%
$260,000
100%
$1,000,000
100.00%
Variable Expenses
$266,400
36%
$65,000
25%
$331,400
33.14%
Contribution Margin (Sales x CM Ratio)
$473,600
64%
$195,000
75%
$668,600
66.86%
Fixed Expenses
$578,500
Net Operating Income
$90,100
Break Even Point in dollar sales
For Company
Total Fixed Expenses
$578,500
Weighted Avg contribution margin ratio
(From Income Statement)
66.86%
Break Even Point in dollars
(Total Fixed Expenses / Contribution Margin Ratio)
$865,241
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