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 $ 116,000 $ 58,000 $ 174,000 Variable expenses 35,800 7,700 43,500 Contribution margin $ 80,200 $ 50,300 130,500 Fixed expenses 86,175 Net operating income $ 44,325 Required: 1. What is the overall contribution margin (CM) ratio for the company?

Question

Cristina Morales

Business

29 June, 14:44

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 $ 116,000 $ 58,000 $ 174,000 Variable expenses 35,800 7,700 43,500 Contribution margin $ 80,200 $ 50,300 130,500 Fixed expenses 86,175 Net operating income $ 44,325 Required: 1. What is the overall contribution margin (CM) ratio for the company?

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Answers (1)

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Royce Sharp · Answer 1

75%

Explanation:

Given that,

Total Sales = $174,000

Total Variable expenses = $43,500

Total contribution margin = $130,500

Total fixed expenses = $86,175

Net operating income = $44,325

Overall contribution margin (CM) ratio for the company:

= (Total contribution margin : Total sales) * 100

= ($130,500 : $174,000) * 100

= 0.75 * 100

= 75%