Exercise 5-12 (Algo) Multiproduct Break-Even Analysis [LO5-9]

Olongapo Sports Corporation distributes two premium golf ballsFlight Dynamic and Sure Shot. Monthly sales and the contribution margin ratios for the two products follow:

ProductTotalFlight DynamicSure ShotSales$ 680,000$ 320,000$ 1,000,000CM ratio60%80%?

Fixed expenses total $580,500 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 $42,000 a month, by how much would you expect the monthly net operating income to increase?