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: Claimjumper Makeover $96,000 $48,000 24,040 4,760 Total $144,000 28,800 Sales Variable expenses Contribution margin Fixed expenses Net operating income $71,960 $43,240 115,200 90, 240 $ 24,960 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 Required Required 1 2 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. (Do not round intermediate calculations. Round your answers to the nearest dollar amount.) Show less Lucido Products Contribution Income Statement Claimjumper Makeover Total Sales $ 0 Variable expenses 0 Contribution margin $ 0 $ 0 0 Fixed expenses Net operating income (loss) < Required 2 Required 3

Answer 1

Requirement: 1 Overall Contribution margin Ratio = (contribution margin / sales)*100 Contriubtion margin Total sales Overall Contribution margin Ratio 115200 144000 80% Requirement: 2 Overall Break-even point in dollars = Fixed expenses / Contribution margin ratio Fixed cost Contribution margin ratio Overall Break even point in dollars 90240 80% 112800 Requirement: 3 Contribution Income Statement Claim jumper 75200 18831 Make over 37600 3729 Total 112800 22560 Break even sales Less: Variable Expenses Contribution margin Less: Fixed expenses Net operating income 56369 33871 90240 90240 0