Olongapo Sports Corporation distributes two premium golf balls-Flight Dynamic and Sure Shot. Monthly sales and the contribution margin ratios for the two products follow: Product Total Flight Dynamic Sure Shot Sales $ 670,000 $330,000 $1,000,000 CM ratio 62% 72% ? Fixed expenses total $591,000 per month. Required: 1. Prepare a contribution format income statement for the company as a whole.

Olongapo Sports Corporation distributes two premium golf balls-Flight Dynamic and Sure Shot. Monthly sales and the contribution margin ratios for the two products follow: Product Total Flight Dynamic Sure Shot Sales $ 670,000 $330,000 $1,000,000 CM ratio 62% 72% ? Fixed expenses total $591,000 per month. Required: 1. Prepare a contribution format income statement for the company as a whole.

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter7: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 29BEB: Sales Needed to Earn Target Income Chillmax Company plans to sell 3,500 pairs of shoes at 60 each in...

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Olivian Company wants to earn 420,000 in net (after-tax) income next year. Its product is priced at 275 per unit. Product costs include: Variable selling expense is 14 per unit; fixed selling and administrative expense totals 290,000. Olivian has a tax rate of 40 percent. Required: 1. Calculate the before-tax profit needed to achieve an after-tax target of 420,000. 2. Calculate the number of units that will yield operating income calculated in Requirement 1 above. (Round to the nearest unit.) 3. Prepare an income statement for Olivian Company for the coming year based on the number of units computed in Requirement 2. 4. What if Olivian had a 35 percent tax rate? Would the units sold to reach a 420,000 target net income be higher or lower than the units calculated in Requirement 3? Calculate the number of units needed at the new tax rate. (Round dollar amounts to the nearest dollar and unit amounts to the nearest unit.)
Deuce Sporting Goods manufactures a high-end model tennis racket. The company’s forecasted income statement for the year, before any special orders, is as follows: Fixed costs included in the forecasted income statement are $400,000 in manufacturing cost of goods sold and $200,000 in selling expenses. A new client placed a special order with Deuce, offering to buy 1,000 tennis rackets for $100.00 each. The company will incur no additional selling expenses if it accepts the special order. Assuming that Deuce has sufficient capacity to manufacture 1,000 more tennis rackets, by what amount would differential income increase (decrease) as a result of accepting the special order? (Hint: First compute the variable cost per unit relevant to this decision.)
Sales Needed to Earn Target Income Chillmax Company plans to sell 3,500 pairs of shoes at 60 each in the coming year. Variable cost is 35% of the sales price; contribution margin is 65% of the sales price. Total fixed cost equals 78,000 (includes fixed factory overhead and fixed selling and administrative expense). Required: 1. Calculate the sales revenue that Chillmax must make to earn operating income of 81,900 by using the point in sales equation. 2. Check your answer by preparing a contribution margin income statement based on the sales dollars calculated in Requirement 1.
Schylar Pharmaceuticals, Inc., plans to sell 130,000 units of antibiotic at an average price of 22 each in the coming year. Total variable costs equal 1,086,800. Total fixed costs equal 8,000,000. (Round all ratios to four significant digits, and round all dollar amounts to the nearest dollar.) Required: 1. What is the contribution margin per unit? What is the contribution margin ratio? 2. Calculate the sales revenue needed to break even. 3. Calculate the sales revenue needed to achieve a target profit of 245,000. 4. What if the average price per unit increased to 23.50? Recalculate: a. Contribution margin per unit b. Contribution margin ratio (rounded to four decimal places) c. Sales revenue needed to break even d. Sales revenue needed to achieve a target profit of 245,000
Olongapo Sports Corporation distributes two premium golf balls—Flight Dynamic and Sure Shot. Monthly sales and the contribution margin ratios for the two products follow: Product Total Flight Dynamic Sure Shot Sales $ 650,000 $ 350,000 $ 1,000,000 CM ratio 66% 74% ? Fixed expenses total $575,000 per month. Required: 1. Prepare a contribution format income statement for the company as a whole.
Olongapo Sports Corporation distributes two premium golf balls—Flight Dynamic and Sure Shot. Monthly sales and the contribution margin ratios for the two products follow: Product Total Flight Dynamic Sure Shot Sales $ 650,000 $ 350,000 $ 1,000,000 CM ratio 66% 74% ? Fixed expenses total $575,000 per month. 3. If sales increase by $57,000 a month, by how much would you expect the monthly net operating income to increase?
Olongapo Sports Corporation distributes two premium golf balls—Flight Dynamic and Sure Shot. Monthly sales and the contribution margin ratios for the two products follow: Product Total Flight Dynamic Sure Shot Sales $ 650,000 $ 350,000 $ 1,000,000 CM ratio 66% 74% ? Fixed expenses total $575,000 per month. 2. What is the company's break-even point in dollar sales based on the current sales mix?
Olongapo Sports Corporation distributes two premium golf balls—Flight Dynamic and Sure Shot. Monthly sales and the contribution margin ratios for the two products follow: Product Flight Dynamic Sure Shot Total Sales ................................................. $150,000 $250,000 $400,000 CM ratio ........................................ 80% 36% ? Fixed expenses total $183,750 per month.Required:1. Prepare a contribution format income statement for the company as a whole. Carry computations to one decimal place.2. What is the company’s break-even point in dollar sales based on the current sales mix?3. If sales increase by $100,000 a month, by how much would you expect the monthly net operating income to increase? What are your assumptions?
Olongapo Sports Corporation distributes two premium golf —Flight Dynamic and Sure Shot. Monthly sales and the contribution margin ratios for the two products follow: Product Total Flight Dynamic Sure Shot Sales $ 720,000 $ 280,000 $ 1,000,000 CM ratio 67% 72% ? Fixed expenses total $570,500 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 $48,000 a month, by how much would you expect the monthly net operating income to increase?
Olongapo Sports Corporation distributes two premium golf balls—Flight Dynamic and Sure Shot. Monthly sales and the contribution margin ratios for the two products follow: Product Total Flight Dynamic Sure Shot Sales $ 660,000 $ 340,000 $ 1,000,000 CM ratio 64% 77% ? Fixed expenses total $572,500 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 $58,000 a month, by how much would you expect the monthly net operating income to increase?
Olongapo Sports Corporation is the distributor in the Philippines of two premium golf balls—the FlightDynamic and the Sure Shot. Monthly sales, expressed in pesos (P), and the contribution margin ratios forthe two products follow:ProductFlight Dynamic Sure Shot TotalSales ......................................... P150,000 P250,000 P400,000CM ratio .................................... 80% 36% ?Fixed expenses total P183,750 per month.Required:1. Prepare a contribution format income statement for the company as a whole. Carry computations toone 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 toincrease? What are your assumptions?
Olongapo Sports Corporation distributes two premium golf balls—the Flight Dynamic and the Sure Shot. Monthly sales and the contribution margin ratios for the two products follow: picture1 Fixed expenses total $183,750 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 $100,000 a month, by how much would you expect net operating incometo increase? What are your assumptions?