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: ClaimjumperMakeover Total $116,000 $ 58,000 174,000 Sales Variable expenses 34,800 28,840 5,960 Contribution margin s 87,160 S 52,040 139,200 91,680 Fixed expenses Net operating $47,520 income Required 1. Compute the overall contribution margin (CM) ratio for the company tio 2. Compute the overall break-even point for the company in dollar sales. (Do not round intermediate calculations. Round your final answer to the nearest dollar amount.) Overall break even point 3. Complete the contribution format income statement at break-even point for the company showing the appropriate levels of sales for the two products (Do not round intermediate calculations. Round your final answers to the nearest dollar amount.) Lucido Products Contribution Income Statement ClaimjumperMakeover Total

Explanation / Answer

Req 1: Total contribution of the company $139,200 Total sales of the company                  $ 174,000 CM ratio = Total contribution / Total sales *100 139200 /174000 *100 =80% Req 2: Total Fixed cost =   91,680 CM ratio = 80% Break even sales in $ = Total fixed cost / CM ratio *100= 91680/80 *100 = $114,600 Req 3: Product Claim Jumper: Sales = $116,000 Variable cost = 28,840 Variable cost ratio = 28840 /116,000 *100 = 24.86% Product Makeover: Sales = $ 58,000 Variable cost = $ 5960 Variable cost ratio = 5960 /58000*100= 10.275% Sales Mix in the ratio of Sales i.e. 116,000 : 58,000 i.e. 2:1 Therefore, Overall Break even sales will be as follows: Sale of Product Claim Jumper = 114,600 *2/3 = $76,400 Sale of Product makeover = 114600 *1/3 = $38,200 CONTRIBUTION INCOME STATEMENT CLAIM JUMPER MAKEOVER TOTAL Sales: 76400 38200 114600 Less: Variable cost Claimjumper"(76400*24.86%) 18995 3925 22920 Makeover(38200*10.275%) Contribution 57405 34275 91680 Less: Fixed cost 91680 Net operatin income 0

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