Question

10, acct

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		28,360				5,840			34,200
Contribution margin	$	85,640			$	51,160			136,800
Fixed expenses									90,480
Net operating income								$	46,320

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

Answer 1

Answer- 1)-The overall contribution margin (CM) ratio for the company:-

=(Total contribution margin/Total sales)*100

=($136800/$171000)*100

=80%

2)- The overall break-even point for the company in dollar sales-

= Total Fixed expenses/ overall contribution margin (CM) ratio

= $90480/80%

= $113100

3)-

Contribution Format income statement
Particulars	Claimjumper	Makeover	Total
	$	$	$
Original dollar Sales	114000	57000	171000
Sales at break even	113100*66.6667%=75400	113100*33.33333%=37700	113100
Particulars	Claimjumper	Makeover	Total
	$	$	$
Sales	75400	37700	113100
Less:- Variable expenses	($28360/$114000)*$75400 =$18757	($5840/$57000)*$37700 = $3863	22620
Contrbution margin			90480
Less:- Fixed expenses			90480
Net Opreating income			NIL