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									85,500
Net operating income								$	42,750

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.

Required 1

Required 2

Required 3

What is the overall contribution margin (CM) ratio for the company?

Overall CM ratio

%

Required 2

Required 3

What is the company's overall break-even point in dollar sales? (Do not round intermediate calculations.)

Overall break-even point

Required 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. (Do not round intermediate calculations. Round your answers to the nearest dollar amount.)

Lucido Products
Contribution Income Statement
	Claimjumper	Makeover	Total
Net operating income (loss)

Answer 1

1)	Overall CM Ration			75%
	total contribution /total sales
	128,250/171000
	75%
2)	overall break even point			114,000
	fixed expense/overall cm ratio
	85,500/75%
	114000
3)				Jumper	Makeover	total
	Sales			76000	38000	114000
	Variable expense			23467	5033	28500
	Contribution margin			52533	32967	85500
	less:Fixed expense					85500
	Net operating income					0
		Sales ratio = 114,000 : 57,000
			2	:	1
		sales of breakven is to be apportioned in the ratio of 2:1
		Variable expense
		maintain original ratio
		jumper = 35200/114000			0.308772
		makeover = 7550/57000=			0.132456