Question

# 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:

 Claimjumper Makeover Total Sales \$ 100,000 \$ 50,000 \$ 150,000 Variable expenses 37,000 8,000 45,000 Contribution margin \$ 63,000 \$ 42,000 105,000 Fixed expenses 77,910 Net operating income \$ 27,090

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)

The overall contribution margin (CM) ratio for the company: -

= (Total contribution margin/Total sales) *100

= (\$105,000/\$150,000) *100

=70%

2)

The overall break-even point for the company in dollar sales: -

=Total Fixed expenses/ overall contribution margin (CM) ratio

=\$77,910/70%

= \$111,300

3)

 Income statement Claimjumper Makeover Total Sales 74,200 (111,300*100,000/150,000) 37,100 (111,300*50,000/150,000) 111,300 Variable Expanse(30% of sales) 22,260 11,130 33,390 Contribution Margin(70% of sales) 51,940 25,970 77,910 Fixed Expanse 77,910 Net operating income 0