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 \$ 96,000 \$ 48,000 \$ 144,000 Variable expenses 24,040 4,760 28,800 Contribution margin \$ 71,960 \$ 43,240 115,200 Fixed expenses 94,560 Net operating income \$ 20,640 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]
Overall contribution margin = Overall contribution margin / Overall total sales
= (\$115200 / \$ 144000) x 100
= 80%
• [2]
Overall break even point in dollars = Fixed expenses / overall CM ratio
= \$ 94560 / 80%
= \$ 118,200
• [3]
 Claimjumper Makeover Total Percent of total sales 66.6667% 33.3333% 100% Sales \$78,800 \$39,400 \$118,200 Variable expenses \$19,733 \$3,907 \$23,640 Contribution margin \$59,067 \$35,493 \$94,560 Fixed expenses \$94,560 Net Operating Income \$0