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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