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 $ 100,000 $ 50,000 $ 150,000 Variable expenses 31,000 6,500 37,500 Contribution margin $ 69,000 $ 43,500 112,500 Fixed expenses 86,175 Net operating income $ 26,325 Required: 1. Compute the overall contribution margin (CM) ratio for the company. 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.) 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.)

Answer 1

• All working forms part of the answer
• Requirement 1

	Claimjumper		Makeover		Total
Percent of total sales	66.6667%		33.3333%		100%
Sales	$100,000	100%	$50,000	100%	$150,000	100%
Variable expenses	$31,000	31%	$6,500	13%	$37,500	25%
Contribution margin	$69,000	69%	$43,500	87%	$112,500	75%
Fixed expenses					$86,175
Net Operating Income					$26,325

Answer: Overall CM ratio = 75% or 0.75

• Requirement 2

A	Total Fixed Cost	$86,175
B	Total [Overall] CM ratio	75%
C = A/B	Overall Break even point	$114,900

• Requirement 3

--Use following data as per your needs

	Claimjumper		Makeover		Total
Percent of total sales	66.6667%		33.3333%		100%
Sales	$76,600	100%	$38,300	100%	$114,900	100%
Variable expenses	$23,746	31%	$4,979	13%	$28,725	25%
Contribution margin	$52,854	69%	$33,321	87%	$86,175	75%
Fixed expenses					$86,175
Net Operating Income					$0