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Shamrock Products markets two video games: Running and Skiing. A contribution format income statement for a recent month for the two games appears below:
Sales
$120,000 $40,000 $160,000
Variable expenses
55.000 17.000 72.000
Contribution margin
$ 65.000
$23,000
88,000
Fixed expenses
41.250
Net operating income
$ 46,750
Required:
Problem 1. Compute the overall contribution margin (CM) ratio for the company.
Problem 2. Compute the overall break-even point for the company in dollar sales .
Problem 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.
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