Lucido Products markets two computer games: Claimjumper and Makeover. A contribu

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 s 114,00e Makeover Total 57,000 171,000 Sales Variable expenses Contribution margin Fixed expenses Net operating income 35,200 7,550 S 49,450 42,750 128,250 86,175 $ 42,075 $ 78,800 Required . 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 Complete this question by entering your answers in the tabs below Required Required 2Required 3 What is the overall contribution margin (CM) ratio for the company? Overall CM ratio

Explanation / Answer

Requirement 1 Claimjumper makeover Total Sales 114000 57000 171000 Variable Expenses 35200 7550 42750 Contribution Margin 78800 49450 128250 Fixed expenses 86175 Net Operating Income 42075 CM% 69.122807 86.75438596 75 The overall contribution margin ratio of the company =Contribution margin/Sales% =128250/171000% 75 Requirement 2 The company's overall Breakeven point in dollar sales =Fixed expenses/Contribution margin ratio =86175/75% 114900 in dollar sales Requirement 3 Income statement at breakeven point sales for two product Claimjumper makeover Total Sales 76600 38300 114900 Variable Expenses 23652 5073 28725 Contribution Margin 52948 33227 86175 Fixed expenses 86175 Net Operating Income 0 Note : Breakeven dollar sales and variable expenses and contribution margin have been Proportionately allocated to product based on Income statement given in the question. Alternatively after allocating dollar sales proportionately to two product, we can apply CM% ratio to product sales to get Contribution margin of each product and it also helps us to find out variable expenses of each prodcut.

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