BRIEF EXERCISE 6–10 Compute the Break-Even Point for a Multiproduct Company [ LO9 ]

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 Variable expenses ...................... 20,000 50,000 70,000 Contribution margin ..................... $10,000 $20,000 30,000 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.