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

		Product
		Flight Dynamic			Sure Shot			Total
Sales	$	660,000		$	340,000		$	1,000,000
CM ratio		66	%		77	%		?

Fixed expenses total $558,500 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 $47,000 a month, by how much would you expect the monthly net operating income to increase?

Question 2

Required information

[The following information applies to the questions displayed below.]

Data for Hermann Corporation are shown below:

	Per Unit				Percent of Sales
Selling price	$	115				100	%
Variable expenses		69				60
Contribution margin	$	46				40	%

Fixed expenses are $83,000 per month and the company is selling 2,500 units per month.

Garrison 16e Rechecks 2017-05-02

rev: 06_04_2020_QC_CS-205709

Required:

1-a. How much will net operating income increase (decrease) per month if the monthly advertising budget increases by $8,800 and monthly sales increase by $20,700?

1-b. Should the advertising budget be increased?