Answer:
Product Flight Dynamic Sure Shot Total
Sales $660,000 $340,000 $1,000,000
CM ratio 63% 78% 68.1%
Contribution margin $415,800 $265,200 $681,000
Fixed expenses ($589,500)
Operating income $91,500
1. Prepare a contribution format income statement for the company as a whole.
Revenue $1,000,000
<u>Variable costs ($319000)</u>
Contribution margin $681,000
<u>Period costs ($589,500)</u>
Operating income $91,500
2. What is the company's break-even point in dollar sales based on the current sales mix?
break even point = fixed costs / CM ratio = $589,500 / 0.681 = $865,638.77
3. If sales increase by $59,000 a month, by how much would you expect the monthly net operating income to increase?
operating income would increase by $59,000 x 0.681 = $40,179
