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

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

	Product
	Flight Dynamic	Sure Shot	Total
Sales	$680,000	$320,000	$1,000,000
CM ratio	65%	72%	?

Fixed expenses total $591,000 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

%

%

%

%

%

%

%

%

%

%

+

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.)

Break-even point in sales

+

3.

If sales increase by $49,000 a month, by how much would you expect net operating income to increase? (Do not round intermediate calculations. Round your answer to the nearest whole dollar amount.)

Net operating income increases by

+

Net operating income increases by

+