The St. Lucia Blood Bank, a private charity (answer attached) - 14464

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Request Description

 

Olongapo Sports Corporation is the distributor in the Philippines of two premium golf ballsâ??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 Total                      
Sales P 150,000 P 250,000 P 400,000                    
CM ratio 80% 36% ?                        
                           
Fixed expenses total P183,750 per month.                  
                           
Requirement 1:                        
                           
Prepare a contribution format income statement for the company as a whole. (Round your percentage values to one decimal place, e.g., .1234 as 12.3. 
                           
2                          
Computer the breakeven 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.   
Solution Description

 

1.The unit product cost under variable costing is computed as follows:

 

 

Direct materials........................

$ 4

 

Direct labor..............................

7

 

Variable manufacturing overhead

   1

 

Variable costing unit product cost

$12

 

    With this figure, the variable costing income statements can be prepared: