Problem: Amazing Products markets to computer games: Predator and Runway. A contribution format income statement for a recent month for the two games appears below:
|
|
Predator
|
Runway
|
Total
|
|
Sales
|
$112,000
|
$56,000
|
$168,000
|
|
Variable expenses
|
27,880
|
5,720
|
33,600
|
|
Contribution margin
|
$ 84,120
|
$50,280
|
134,400
|
|
Fixed expenses
|
|
|
90,000
|
|
Net operating income
|
|
|
$ 44,400
|
Requirement 1:
Compute the overall contribution margin (CM) ratio for the company.
Overall CM ration = ______ %
Requirement 2:
Compute the overall break-even point for the company in sales dollars.
Overall break-even = $_______
Requirement 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. (Round answer to the nearest dollar amount. Do not round interim calculation and leave no cells blank – be certain to enter 0 wherever required)
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|
Predator
|
Runway
|
Total
|
|
Original dollar sales
|
$
|
$
|
$
|
|
Sales at break-even
|
$
|
$
|
$
|
|
|
Predator
|
Runway
|
Total
|
|
Sales
|
$
|
$
|
$
|
|
Variable expenses
|
|
|
|
|
Contribution margin
|
$
|
$
|
|
|
Fixed expenses
|
|
|
|
|
Net operating income
|
|
|
$
|