Question

Lucido Products markets two computer games: Claimjumper and Makeover. A contribution format income statement for a recent month for the two games appears below: points Sales Variable expenses Contribution margin Fixed expenses Net operating income Clain jumper $104,000 38,440 $ 65,560 Makeover $ 52,000 8,360 $43,660 Total $ 156,000 46.800 109,200 0.630 $ 28,770 Required: 1. What is the overall contribution margin (CM) ratio for the company? 2. What is the company's overall break-even point in dollar sales? 3. Prepare a contribution format income statement at the company's break-even point that shows the appropriate levels of sales for the two products. References Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Prepare a contribution format income statement at the company's break-even point that shows the appropriate levels of sales for the two products. (Do not round Intermediate calculations. Round your answers to the nearest dollar amount.) Engberg Company Contribution Income Statement Claimjumper Makeover $ 19,750 S 42 1200 Variable expenses 7,304 34.117 Contribution margin $ 12,456 $ 8,003 Fixed expenses Net operating income (los) Total 61 580 41421 20450 20.459 ( Required 2 Required

Answer 1

Answer of Part 1:

Overall Contribution Margin Ratio = Total Contribution Margin / Sales * 100
Overall Contribution Margin Ratio = $109,200 / $156,000 * 100
Overall Contribution Margin Ratio = 70%

Answer of Part 2:

Overall Break Even Point in Dollar Sales = Total Fixed cost / Overall Contribution Margin Ratio
Overall Break Even Point in Dollar Sales = $80,430 / 0.70
Overall Break Even Point in Dollar Sales = $114,900

Answer of Part 3:

Sales Variable expenses Contribution margin Fixed expenses Net operating income Claimjumper Makeover Total $ 76,600 $ 38,300 $ 114,900 $ 28,313 $ 6,157 $ 34,470 $ 48,287 $ 32,143 $ 80,430 $ 80,430

Original Data:

Claimjumper:

Weight of Total Sales = $104,000 / $156,000
Weight of Total Sales = 66.667%

Variable Cost Ratio = $38,440 / $104,000
Variable Cost Ratio = 36.96%

Makeover:

Weight of Total Sales = $52,000 / $156,000
Weight of Total Sales = 33.333%

Variable Cost Ratio = $8,360 / $52,000
Variable Cost Ratio = 16.08%