Exercise 5-10 Multiproduct Break-Even Analysis [LO5-9]

Exercise 5-10 Multiproduct Break-Even Analysis [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:

	Claimjumper				Makeover			Total
Sales	$	102,000			$	51,000		$	153,000
Variable expenses		31,600				6,650			38,250
Contribution margin	$	70,400			$	44,350			114,750
Fixed expenses									88,200
Net operating income								$	26,550

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.