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		36,400				7,850			44,250
Contribution margin	$	81,600			$	51,150			132,750
Fixed expenses									88,650
Net operating income								$	44,100

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