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    Lucido Products

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    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 $30,000 $70,000 $100,000
    Less variable expenses 20,000 50,000 70,000
    Contribution margin $10,000 $20,000 30,000
    Less fixed expenses 24,000
    Net operating income $6,000

    Required:
    1. Compute the overall contribution margin (CM) ratio for the company
    2. Compute the overall break-even point for the company in sales dollars.
    3. Verify the overall break-even point for the company by constructing a contribution format income statement showing the appropriate levels of sales for the two products.

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    https://brainmass.com/business/financial-ratios/lucido-products-130927

    Solution Preview

    1. Compute the overall contribution margin (CM) ratio for the company
    30,000/100,000 = 30%

    2. Compute the overall break-even point for the company in sales dollars.
    Breakeven point in sales dollars = Total Fixed Cost/Contribution margin ratio
    = 24,000/0.30
    = $80,000

    3. Verify the overall break-even point for the company by constructing a ...

    Solution Summary

    This solution is comprised of a detailed explanation to compute the overall contribution margin (CM) ratio for the company, the overall break-even point for the company in sales dollars, and verify the overall break-even point for the company by constructing a contribution format income statement showing the appropriate levels of sales for the two products.

    $2.19