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: Sales Variable expenses Contribution margin Fixed expenses Net operating income claimjumper Makeover $ 30,000 $70,000 20,000 50,000 $ 10,000 $20,000 $100,000 70,000 30,000 24,000 $ 6,000 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. Required 1 Required 2 Required 3 What is the overall contribution margin (CM) ratio for the company? Overall CM ratio Required 1 Required 2 >

Answer 1

Solution

Overall CM ratio

30%

.

Overall Break-even point

$    80,000.00

.

Lucido Products
Contribution income statement
	Claimjumper	Makeover	Total
Sales	$          24,000	$              56,000	$           80,000
Variable expenses	$          16,000	$              40,000	$           56,000
Contribution margin	$            8,000	$              16,000	$           24,000
Fixed cost			$           24,000
Net operating income (loss)			$                    -

Working

	Total
Sales	$ 100,000.00
Variable expenses	$    70,000.00
Contribution margin	$    30,000.00
Contribution margin ratio(30000/100000)	30%
Fixed cost	$    24,000.00
Overall Break-even point (24000/30%)	$    80,000.00

.

Lucido Products
Contribution income statement
	Claimjumper	Makeover
Sales	=30000/100000*80000	=70000/100000*80000
Variable expenses	=20000/30000*24000	=50000/70000*56000