Lucky Products markets two computer games: Predator and Runway

Compute the Break=Even Point for a Multiproduct Company 

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.

Here’s the SOLUTION

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