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 77,700
Net operating income $ 27,300
Required:
1. What is the overall contribution margin (CM) ratio for the
company? 70 %
2. What is the company's overall break-even point in dollar sales?
111,000.00
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.
If you could please show clear calculations for #3. Thank you!
3 | |||
Lucido Products | |||
Contribution Income statement | |||
Claimjumper | Makeover | Total | |
Sales | 74000 | 37000 | 111000 |
Variable expenses | 27380 | 5920 | 33300 |
Contribution margin | 46620 | 31080 | 77700 |
Fixed expenses | 77700 | ||
Net operating income | 0 | ||
Workings: | |||
Sales mix: | |||
Claimjumper = 100000/150000 = 2/3 | |||
Makeover = 50000/150000 =1/3 | |||
Sales at break even: | |||
Claimjumper = 111000*2/3 = $74000 | |||
Makeover = 111000*1/3=$37000 | |||
Variable expense ratio: | |||
Claimjumper = 37000/100000 = 37% | |||
Makeover = 8000/50000= 16% | |||
Variable expense at break even: | |||
Claimjumper = 74000*37%= $27380 | |||
Makeover = 37000*16%= $5920 | |||
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