Olongapo Sports Corporation is the distributor in the Philippines of two premium golf ballsthe Flight Dynamic and

Question:

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 P150,000 Total Sales P250,000 P400,000 36% CM ratio 80%

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?

Contribution Margin
Contribution margin is an important element of cost volume profit analysis that managers carry out to assess the maximum number of units that are required to be at the breakeven point. Contribution margin is the profit before fixed cost and taxes... Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...