Question

Exercise 5-10 (Algo) Multiproduct Break-Even Analysis [LO5-9] 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 $ 112,000 $ 56,000 $ 168,000 Variable expenses 41,320 9,080 50,400 Contribution margin $ 70,680 $ 46,920 117,600 Fixed expenses 81,060 Net operating income $ 36,540 Required: 1. What is the overall contribution margin (CM) ratio for the company

Answer 1

Contribution margin ratio= 0.7

Step-by-step explanation:

Giving the following information:

Total

Sales $168,000

Variable expenses 50,400

To calculate the contribution margin ratio, we need to use the following formula:

Contribution margin ratio= (sales - total variable cost) / sales

Contribution margin ratio= (168,000 - 50,400) / 168,000

Contribution margin ratio= 0.7