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:

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.

	Claimjumper				Makeover			Total
Sales	$	96,000			$	48,000		$	144,000
Variable expenses		29,800				6,200			36,000
Contribution margin	$	66,200			$	41,800			108,000
Fixed expenses									86,850
Net operating income								$	21,150

	Engberg Company Contribution Income Statement Claimjumper Makeover Total Net operating income (loss)

Answer 1

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

=(Total contribution margin/Total sales)*100

=($108000/$144000)*100 =75%

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

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

=$86850/75% = $115800

3)-

Contribution Format income statement
Particulars	Claimjumper	Makeover	Total
	$	$	$
Original dollar Sales	96000	48000	144000
Sales at break even	115800*66.6667%=77200	115800*33.33333%=38600	115800
Particulars	Claimjumper	Makeover	Total
	$	$	$
Sales	77200	38600	115800
Less:- Variable expenses	(29800/96000)*77200 =23964	(6200/48000)*38600 =4986	28950
Contribution margin			86850
Less:- Fixed expenses			86850
Net Operating income			NIL