Exercise 5-10 Compute the Break-Even Point for a Multiproduct Company [LO5-9] Lu

Question

Exercise 5-10 Compute the Break-Even Point for a Multiproduct Company [LO5-9]

Lucido Products markets two computer games: Claimjumper and Makeover. A contribution format income statement for a recent month for the two games appears below:

Compute the overall contribution margin (CM) ratio for the company.

      

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.)

      

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.)

Lucido Products markets two computer games: Claimjumper and Makeover. A contribution format income statement for a recent month for the two games appears below:

Explanation / Answer

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

=(Total contribution margin/Total sales)*100

=($102900/$147000)*100 =70%

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

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

=$78120/70% = $111600

3)-

Contribution Format income statement Particulars Claimjumper Makeover Total $ $ $ Original dollar Sales 98000 49000 147000 Sales at break even 111600*66.6667%=74400 111600*33.33333%=37200 111600 Particulars Claimjumper Makeover Total $ $ $ Sales 74400 37200 111600 Less:- Variable expenses (36280/98000)*74400 =27543 (7820/49000)*37200 =5937 33480 Contrbution margin 78120 Less:- Fixed expenses 78120 Net Opreating income NIL

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