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 | $ | 116,000 | $ | 58,000 | $ | 174,000 | |||
Variable expenses | 28,840 | 5,960 | 34,800 | ||||||
Contribution margin | $ | 87,160 | $ | 52,040 | 139,200 | ||||
Fixed expenses | 88,560 | ||||||||
Net operating income | $ | 50,640 | |||||||
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.
1. Contribution margin (CM) ratio = Contribution /Sales = $139,200 / $174,000 = 80%
2. Break-even point in dollar sales = Fixed expenses /
Contribution margin ratio
= $88,560 / 0.80 = $110,700
3.
Claimjumper | Makeover | Total | |
Sales | 116,000/174,000 x 110,700 = $73,800 | 58,000/174,000 x 110,700 = $36,900 | $110,700 |
Variable expenses | 28,840/34,800 x 22,140= $18,348 | 5,960/34,800 x 22,140= $3,792 | $110,700 x .20 = $22,140 |
Contribution margin | $55,452 | $33,108 | $88,560 |
Fixed expenses | $88,560 | ||
Net operating income | $0 |
Lucido Products markets two computer games: Claimjumper and Makeover. A contribution format income statement for a...
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...
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