Problem

Compute the Break-Even Point for a Multiproduct CompanyLucky Products markets two computer...

Compute the Break-Even Point for a Multiproduct Company

Lucky Products markets two computer games: Predator and Run way. A contribution form at

income statement for a recent month for the two games appears below:

 

Predator

Runway

Total

Sales

$100,000

$50,000

$150,000

Variable expenses

25,000

5,000

30,000

Contribution margin

$ 75,000

$45,000

120,000

Fixed expenses

 

 

90,000

Net operating income

 

 

$ 30,000

Required:

1. Compute the overall contribution margin (CM) ratio for the company.

2. Compute the overall break-even point for the company in sales dollars.

3. Verify the overall break-even point for the company by constructing a contribution format income statement showing the appropriate levels of sales for the two products

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Solutions For Problems in Chapter 5