Head - First Company plans to sell 5,000 bicycle helmets at $70 each in the coming year. Unit variable cost is $49 (includes direct materials, direct labour, variable overhead, and variable selling expense). Total fixed cost equals $29,400 (includes fixed factory overhead and fixed selling and administrative expense). Requirements: 1. Calculate the number of helmets Head - First must sell to earn operating income of $81, 900 before income taxes (ie, ignore income taxes). 2. Calculate the sales revenue that Head - First must make to earn operating income of $81,900 before income taxes (ie, ignore income taxes). 3. (a) Calculate the margin of safety in terms of the number of units at 5,000 units sold. (b) Calculate the margin of safety in terms of sales revenue at 5,000 units sold. 4. For Head - First Company, operating income at 5,000 units sold is $ 75,600. Calculate the degree of operating leverage at this level of sales. (Round your answer to the nearest tenth.
Head - First Company plans to sell 5,000 bicycle helmets at $70 each in the coming year. Unit variable cost is $49 (includes direct materials, direct labour, variable overhead, and variable selling expense). Total fixed cost equals $29,400 (includes fixed factory overhead and fixed selling and administrative expense). Requirements: 1. Calculate the number of helmets Head - First must sell to earn operating income of $81, 900 before income taxes (ie, ignore income taxes). 2. Calculate the sales revenue that Head - First must make to earn operating income of $81,900 before income taxes (ie, ignore income taxes). 3. (a) Calculate the margin of safety in terms of the number of units at 5,000 units sold. (b) Calculate the margin of safety in terms of sales revenue at 5,000 units sold. 4. For Head - First Company, operating income at 5,000 units sold is $ 75,600. Calculate the degree of operating leverage at this level of sales. (Round your answer to the nearest tenth.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
am. 123.
Transcribed Image Text:Head - First Company plans to sell 5,000 bicycle helmets at $70 each in the coming year. Unit variable cost is $49 (includes direct materials, direct labour, variable overhead,
and variable selling expense). Total fixed cost equals $29,400 (includes fixed factory overhead and fixed selling and administrative expense). Requirements: 1. Calculate
the number of helmets Head - First must sell to earn operating income of $81, 900 before income taxes (ie, ignore income taxes). 2. Calculate the sales revenue that Head -
First must make to earn operating income of $81,900 before income taxes (ie, ignore income taxes). 3. (a) Calculate the margin of safety in terms of the number of units at
5,000 units sold. (b) Calculate the margin of safety in terms of sales revenue at 5,000 units sold. 4. For Head - First Company, operating income at 5,000 units sold is $
75,600. Calculate the degree of operating leverage at this level of sales. (Round your answer to the nearest tenth.
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