Question
I only need help completing the Contribution Income Statement (number 3) In conducting interviews and observing factory operations to implement an activity-based costing system, you
I only need help completing the Contribution Income Statement (number 3)
In conducting interviews and observing factory operations to implement an activity-based costing system, you determine that several activities are unnecessary or redundant. For example, warehouse personnel were inspecting purchased components as they were received at the loading dock. Later that day, the components were inspected again on the shop floor before being installed in the final product. Both of these activities caused costs to be incurred but were not adding value to the product. If you include this observation in your report, one or more employees who perform inspections will likely lose their jobs.
Lucido Products markets two computer games: Claim-jumper and Makeover. A contribution format income statement for a recent month for the two games appears below:
Claim-Jumper Makeover Total
Sales $110,000 $55,000 $165,000
Variable Expenses $34,000 $7,250 $41,250
Contribution Margin $76,000 $47,750 $123,750
Fixed Expenses $84,150
Net Operating Income $39,600
Required:
1.Compute the overall contribution margin (CM) ratio for the company.
Overall CM Ratio:75%
2.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.)
Overall Break-Even Point: $112,000
3.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
Contribution Income Statement
Claim-jumper Makeover Total
Sales:
Variable Expenses:
Contribution margin:
Fixed expenses:
Net operating income:
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