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		Total
Sales	$	114,000	$	57,000	$	171,000
Variable expenses		35,200		7,550		42,750
Contribution margin	$	78,800	$	49,450		128,250
Fixed expenses						83,925
Net operating income					$	44,325

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

      

2.	Compute the overall break-even point for the company in dollar sales. (Do not round intermediate calculations. Round your final answer to the nearest dollar amount.)

      

3.	Complete the contribution format income statement at break-even point for the company showing the appropriate levels of sales for the two products. (Do not round intermediate calculations. Round your final answers to the nearest dollar amount.)

     

Answer 1

1) Overall Contribution Margin Ratio :-

= Total Contribution Margin / Total Sales

= $128250 / $171000

= 0.75 or 75%

2) Overall Break even point in Dollar :-

= Total Fixed Cost / Overall Contribution Margin Ratio

= $83925 / 0.75

= $111900

3) Income Statement :-

Sales at Break even point :-

Particulars	Claimjumper	Makeove	Total
Sales Ratio	($114000/$171000)=0.6667	($57000/$171000)=0.3333	1
Sales	$74600	$37300	$111900
Less : Variable Cost	($23034)	($4941)	($27975)
Contribution	$51566	$32359	$83925
Less : Fixed Cost			($83925)
Net Profit			Nil