Respuesta :
Answer:
1.The overall contribution margin ratio for the company is 0.70.
2. The company's overall break even point in dollar sales is $111,000.
3. Contribution format statement:
Claimjumper Makeover Total
Sales 74000 37000 111000
VC 27365.4902 5934.509804 33300
Contribution 46634.5098 31065.4902 77700
Fixed Costs 77700
Net Income (contribution - fixed costs) 0
We follow these steps to arrive at the answer:
1. Calculation of Contribution margin:
[tex]Contribution Margin = \frac{Total Contribution}{Total Sales}[/tex]
[tex]Contribution Margin = \frac{107100}{153000}[/tex]
[tex]Contribution Margin = 0.70[/tex]
2. Calculation of Break Even Point in Dollar Sales:
[tex]Break Even Point in dollar sales = \frac{Total Fixed Costs}{Contribution Margin}[/tex]
[tex]Break Even Point in dollar sales = \frac{77,700}{0.7}[/tex]
[tex]Break Even Point in dollar sales = 111000[/tex]
3. Contribution format income statement
First we find the ratios of Claimjumper's and Makeover's sales to total sales.
Similarly we need to find the ratios of these products' individual variable costs to total variable costs.
Sales:
Claimjumper [tex]\frac{102000}{153000} = \frac{2}{3}[/tex]
Makeover [tex]\frac{51000}{153000} = \frac{1}{3}[/tex]
Variable Costs
Claimjumper [tex]\frac{37720}{102000} = 0.369803922[/tex]
Makeover [tex]\frac{8180}{51000} = 0.160392157[/tex]
At breakeven sales, the contribution format for Claimjumper is as follows:
Claimjumper
Sales [tex]111000*\frac{2}{3} = 74000[/tex]
less Variable Costs [tex]74000 * 0.369803922 = 27365.4902[/tex]
Contribution Margin [tex]74000 - 27365.4902 = 46634.5098[/tex]
At breakeven sales, the contribution format for Makeover is as follows:
Makeover
Sales [tex]111000*\frac{1}{3} = 37000[/tex]
less Variable Costs [tex]37000 * 0.160392157 = 5934.509804[/tex]
Contribution Margin [tex]37000 - 5934.509804 = 31065.4902[/tex]
