Question
Hi, I have completed part 1 and 2, but I need help with part 3. Thank you ! Lucky Products markets two computer games: Predator
Hi, I have completed part 1 and 2, but I need help with part 3. Thank you !
Lucky Products markets two computer games: Predator and Runway. A contribution format income statement for a recent month for the two games appears below:
Predator | Runway | Total | |
Sales .......................... | $100,000 | $50,000 | $150,000 |
Variable expenses . . . . . . . . . . . . . . . . | 25,000 | 5,000 | 30,000 |
Contribution margin . . . . . . . . . . . . . . . | $ 75,000 | $45,000 | 120,000 |
Fixed expenses . . . . . . . . . . . . . . . . . . | 90,000 | ||
Net operating income . . . . . . . . . . . . . | $ 30,000 |
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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