o.com-Online Sh....P Olongapo Sports Corporation distributes two premiurn gol ba

Question

o.com-Online Sh....P Olongapo Sports Corporation distributes two premiurn gol balls -the Flight Dynamic and the Sure Shot Monthly sales and the contribution margin ratios for the two products follow Total $700,000 300,000 $1,000,000 69% 75% Foxed expenses total $565,000 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 Amount up

Explanation / Answer

1.

2. Break-even point in sales = Fixed expenses/Contribution margin ratio = $565000/70.80% = $798022.60 = $798023

3. Net operating income increases by: $2973600

Increase in net operating income = Degree of operating leverage x Percentage increase in sales x Net operating income = $708000/$143000 x $42000/$1000000 x 100 x $143000 = $2973600.

Degree of operating leverage = Contribution margin/Net operating income = $708000/$143000

Percentage increase in sales = $42000/$1000000

Net operating income = $143000

Olongapo Sports Corporation Flight Dynamic Sure Shot Total Company Amount % Amount % Amount % Sales 700000 100.00 % 300000 100.00 % 1000000 100.00 % Variable expenses 217000 31.00 % 75000 25.00 % 292000 29.20 % Contribution margin 483000 69.00 % 225000 75.00 % 708000 70.80 % Fixed expenses 565000 Net operating income 143000

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