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 $ 104,000 32,200 $ 71,800 Makeover $ 52,000 6,800 $ 45,200 Total $156,000 39,000 117,000 87,525 $ 29,475 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.

Required 3 format is as follows;

Answer 1

Requirement 1

Contribution margin ratio

75%

Requirement 2

Overall Break-even point

$ 116,700.00

Requirement 3

Lucido Products
Contribution income statement
	Claimjumper	Makeover	Total
Sales	$          77,800	$              38,900	$        116,700
Variable expenses	$          24,088	$                 5,087	$           29,175
Contribution margin	$          53,712	$              33,813	$           87,525
Fixed cost			$           87,525
Net operating income (loss)			$                    -

Working

	Total
Sales	$ 156,000.00
Variable expenses	$    39,000.00
Contribution margin	$ 117,000.00
Contribution margin ratio	75%
Fixed cost	$    87,525.00
Overall Break-even point	$ 116,700.00

.

Lucido Products
Contribution income statement
	Claimjumper	Makeover
Sales	=116700/156000*104000	=116700/156000*52000
Variable expenses	=32200/104000*77800	=6800/52000*38900