Lucido Products markets two computer games: Claimjumper and Makeover. A contribution format income statement for a recent month for the two games appears below:
Claimjumper | Makeover | Total | |||||||
Sales | $ | 98,000 | $ | 49,000 | $ | 147,000 | |||
Variable expenses | 30,400 | 6,350 | 36,750 | ||||||
Contribution margin | $ | 67,600 | $ | 42,650 | 110,250 | ||||
Fixed expenses | 83,700 | ||||||||
Net operating income | $ | 26,550 | |||||||
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.
1) | contribution margin (CM) ratio = Contribution /Sales | |||||
=$110250/147000 | ||||||
75% | ||||||
2) | overall break-even point in dollar sales =Fixed Expenses/Contribution margin ratio | |||||
=$83700/0.75 | ||||||
$ 1,11,600 | ||||||
3) | ||||||
Claimjumper | Makeover | Total | ||||
Sales | $ 74,400 | $ 37,200 | $ 1,11,600 | |||
Variable Cost | $ 23,079 | $ 4,821 | $ 27,900 | |||
Contribution Margin | $ 51,321 | $ 32,379 | $ 83,700 | |||
Fixed Expenses | $ 83,700 | |||||
Net operating income | $ - | |||||
Lucido Products markets two computer games: Claimjumper and Makeover. A contribution format income statement for a...
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