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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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