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	$	118,000			$	59,000		$	177,000
Variable expenses		43,480				9,620			53,100
Contribution margin	$	74,520			$	49,380			123,900
Fixed expenses									79,380
Net operating income								$	44,520

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.

Answer 1