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 | $ | 118,000 | $ | 59,000 | $ | 177,000 | |||
Variable expenses | 36,400 | 7,850 | 44,250 | ||||||
Contribution margin | $ | 81,600 | $ | 51,150 | 132,750 | ||||
Fixed expenses | 88,425 | ||||||||
Net operating income | $ | 44,325 | |||||||
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. |
Answer- 1)-The overall contribution margin (CM) ratio for the company =(Total contribution margin/Total sales)*100
=($132750/$177000)*100
= 75%
2)- The overall break-even point for the company in dollar sales = Total Fixed expenses/ Overall contribution margin (CM) ratio
= $88425/75%
= $117900
3)-
Contribution Format income statement | |||
Particulars | Claimjumper | Makeover | Total |
$ | $ | $ | |
Original dollar Sales | 118000 | 59000 | 177000 |
Sales at break even | $117900*66.6667%= $78600 | $117900*33.33333%= $39300 | 117900 |
Particulars | Claimjumper | Makeover | Total |
$ | $ | $ | |
Sales | 78600 | 39300 | 117900 |
Less:- Variable expenses | ($36400/$118000)*$78600 =$24246 | ($7850/$59000)*$39300 = $5229 | 29475 |
Contrbution margin | 88425 | ||
Less:- Fixed expenses | 88425 | ||
Net Opreating income | NIL |
Lucido Products markets two computer games: Claimjumper and Makeover. A contribution format income statement for a...
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