Compute the overall contribution margin (CM) ratio.
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
|
$30,000
|
$70,000
|
$100,000
|
|
Less variable expanses
|
20,000
|
50,000
|
70,000
|
|
Contribution margin
|
$10,000
|
$20,000
|
30,000
|
|
Less fixed expenses
|
|
|
24,000
|
|
Net operating income
|
|
|
$6,000
|
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.
4. Jamil Company, which has only one product, has provided the following data concerning its most recent month of operations:
|
Selling price
|
$71
|
|
Units in beginning inventory
|
400
|
|
Units produced
|
8,100
|
|
Units sold
|
8,200
|
|
Units in ending inventory
|
300
|
|
Variable cost per unit:
|
|
|
Direct Materials
|
$20
|
|
Direct Labor
|
$15
|
|
Variable manufacturing overhead
|
$6
|
|
Variable selling and administrative
|
$4
|
|
Fixed costs:
|
|
|
Fixed manufacturing overhead
|
$64,800
|
|
Fixed selling and administrative
|
$139,400
|
The company produces the same number of units every month, although the sales in units vary from month to month.
The company variable costs per unit and total fixed costs have been constant from month to month.
Required:
(a) What is the unit product cost for the month under variable costing?
(b) What is the unit product cost for the month under absorption costing?
(c) What is the net operating income for the month under variable costing?
(d) What is the net operating income for the month under absorption costing?