Question

Chs Homework Check my world Lucido Products markets two computer games: Claimjumper and Makeover. A contribution format income statement for a recent month for the two games appears below. Makeover $ 156.000 ales Variable expenses Contribution margin Fixed expenses Het operating Income Clai jumper $104,000 38.440 65,560 $52.000 8,360 543,640 109,200 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 the two products References Complete this question by entering your answers in the tabs below Required 1 Required 2 Required 3 What is the overall contribution margin (CH) ratio for the company? Da Mato < Prev 5 of 5 Next >

Answer 1

1. Overall contribution margin ratio for the company:

Total sales = $156,000

Total contribution margin = $109,200

Contribution margin ratio = contribution margin / total sales = $109,200/156,000 = 70 %

2. Overall break-even dollar sales for the company:

Break-even sales in dollars = fixed cost / contribution margin ratio

Given, Fixed cost = $80,430

Break-even sales in dollars = $80,430 / 70% = $ 114,900

3. Contribution margin income statement at the break-even dollar sales

Current sales mix = 104,000 : 52,000 = 2:1 i.e. 2/3 and 1/3

Dividing breakeven as per sales mix as:

Claimjumper = 114,900 * 2/3 = $ 76,600

Makeover = 114,900 * 1/3 = $ 38,300

Current Variable expense ratio:

Claimjumper = 38,440/104,000 = 36.961%

Makeover = 8360/52,000 = 16.077%

Lucido products

Contribution Format Income statement

	Claimjumper	Makeover	Total
Sales	$76,600.00	$38,300.00	$114,900.00
Variable expenses ( ratio X sales )	$28,312.13	$6,157.49	$34,469.62
Contribution margin	$48,287.87	$32,142.51	$80,430.38
Fixed expenses			$80,430.00
Net operating income			NIL

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