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Exercise 6-10 Multiproduct Break-Even Analysis (L06-9) Lucido Products markets two computer games: Claimjumper and Makeover.
Exercise 6-10 Multiproduct Break-Even Analysis (L06-9) Lucido Products markets two computer games: Claimjumper and Makeover.
Exercise 6-10 Multiproduct Break-Even Analysis (L06-9) Lucido Products markets two computer games: Claimjumper and Makeover.
1. What is the overall contribution margin (CM) ratio for the company? 2. What is the companys overall break-even point in d
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Answer #1

1) 0.75 times

CM ratio for the company=total contribution margin/total sales

total contribution margin=$66200+$41800=$108000

total sales=$96000+$48000=$144000

CM ratio for the company=$108000/$144000=0.75

2) $117300

overall breakeven sales for the company=total fixed cost/CM ratio

total fixed cost=$87975

CM ratio =0.75

overall breakeven sales for the company=$87975/0.75=$117300

3)

claimjumper makeover total
sales $78200 $39100 $117300
variable expenses $19550 $9775 $29325
contribution margin $58650 $29325 $87975
fixed expense $87975
net income (loss) 0

at breakeven point total sales is $117300

sales for

claimjumper=$117300*($96000/$144000)=$78200

makeover=$117300*(48000/$144000)=$39100

varaible expenses

the CM ratio is 0.75 then the variable cost is 0.25 times (1-0.75) of the sales

at breakeven sales variable expense for

claimjumper=$78200*0.25=$19550

makeover=$39100*0.25=$9775

contribution margin for

claimjumber=$78200-$19550=$58650

makeover=$39100-$9775=$29325

total contribution margin=$58650+$29325=$87975

total fixed expense=$87975

net operating income (loss)=$87975-$87975=$0

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