The overall contribution margin (CM) ratio for the company is 30% and Overall break-even point in dollar sales is $80,000.
<h3>Contribution margin (CM) ratio </h3>
1. Overall contribution margin ratio
Overall contribution margin ratio = Total contribution margin/Total sales
Overall contribution margin ratio= $30,000/ $100,000
Overall contribution margin ratio = 30%
2. Overall break-even point in dollar sales
Overall break-even = Total fixed expenses/ Overall contribution margin ratio
Overall contribution margin ratio= $24,000/30%
Overall contribution margin ratio= $80,000
3. Contribution format income statement
Claim-jumper Makeover Total
Original dollar sales $30,000 $70,000 $100,000
Percent of total 30% 70% 100%
Sales at break-even $24,000 $56,000 $80,000
Variable expenses:
Claim-jumper
Variable expenses= ($24,000/$30,000) × $20,000
Variable expenses= $16,000
Makeover
Variable expenses=($56,000/$70,000) × $50,000
Variable expenses= $40,000
Therefore the overall contribution margin (CM) ratio for the company is 30% and Overall break-even point in dollar sales is $80,000.
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