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: Claim jumper $116,000 42,760 S 73.240 Makeover $58.000 9.440 $ 48,560 Sales Variable expenses Contribution margin Fixed expenses Het operating income Total $ 174,000 52,200 121,800 77.910 $ 3.890 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. Complete this question by entering your answers in the tabs below Requided 1 Required 2 Required 3 What is the overall contribution margin (CM) ratio for the company? Overall CM ratio

Answer 1

Solution 1:

Overall CM ratio = Contribution margin / sales = $121,800 / $174,000 = 70%

Solution 2:

Overall break even point in dollar sales = Fixed costs / Overall CM ratio = $77,910 / 70% = $111,300

Solution 3:

Particulars	Claimjumper	Makeover	Total
Sales	$74,200.00	$37,100.00	$111,300.00
Variable expenses	$27,352.00	$6,038.00	$33,390.00
Contribution margin	$46,848.00	$31,062.00	$77,910.00
Fixed expenses			$77,910.00
Net operating income			$0.00