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 $ 116,000 28,840 $ 87,160 Makeover $ 58,000 5,960 $ 52,040 Total $ 174,000 34,800 139,200 89,520 $ 49,680 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

A B с D 1 1) 2 Total sales $ 174,000 3 Total contribution margin $ 139,200 4 Overall CM ratio 80% 5 6 2) 7 Total fixed costs $ 89,520 8 Overall CM ratio 80% 9 Overall break-even point $ 111,900 10 11 3) 12 Claimjumper Makeover 13 Variable costs ratio to sales 25% 10% 14 Sales ratio 67% 33% 15 Break even sales $ 74,600 $ 37,300 16 17 Lucido Products 18 Contribution Income Statement 19 Claimjumper Makeover Total 20 Sales $ 74,600 $ 37,300 $ 111,900 21 Variable expenses $ 18,547 $ 3,833 $ 22,380 22 Contribution margin $ 56,053 $ 33,467 $ 89,520 23 Fixed expenses $ 89,520 24 Net operating income (loss) $ 1

A B с D 174000 139200 =+B3/B2 1 1) 2 Total sales 3 Total contribution margin 4 Overall CM ratio 5 62) 7 Total fixed costs 8 Overall CM ratio 9 Overall break-even point 10 89520 =+B4 =+B7/B8 11 3) 12 17 Claimjumper Makeover 13 Variable costs ratio to sales =28840/116000 =5960/58000 14 Sales ratio =116000/174000 =58000/174000 15 Break even sales =+B9*B14 =+B9*C14 16 Lucido Products 18 Contribution Income Statement 19 Claimjumper Makeover Total 20 Sales =+B15 =+C15 =+B20+C20 21 Variable expenses =+B20*B13 =+C20*С13 =+B21+C21 22 Contribution margin =+B20-B21 =+C20-C21 =+D20-D21 23 Fixed expenses 89520 24 Net operating income (loss) =+D22-D23