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Head-First Company plans to sell 5,000 bicycle helmets at $75 each in the coming year. Product costs include: Direct materials per helmet - $ 30 Direct labor per helmet - 8 Variable factory overhead per helmet - 4 Total fixed factory overhead - 20,000 Variable selling expense is a commission of $3 per helmet and fixed selling and administrative expenses total $29,500. A) Compute the total variable cost per unit. B) Calculate the total fixed expense for the year. C) Prepare a contribution margin income statement for the Head- First Company. D) Calculate the break-even point in units and dollars.

Head-First Company plans to sell 5,000 bicycle helmets at $75 each in the coming year. Product costs include: Direct materials per helmet - $ 30 Direct labor per helmet - 8 Variable factory overhead per helmet - 4 Total fixed factory overhead - 20,000 Variable selling expense is a commission of $3 per helmet and fixed selling and administrative expenses total $29,500. A) Compute the total variable cost per unit. B) Calculate the total fixed expense for the year. C) Prepare a contribution margin income statement for the Head- First Company. D) Calculate the break-even point in units and dollars.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Head-First Company plans to sell 5,000 bicycle helmets at $75 each in the coming year. Product costs include: Direct materials per helmet - $ 30 Direct labor per helmet - 8 Variable factory overhead per helmet - 4 Total fixed factory overhead - 20,000 Variable selling expense is a commission of $3 per helmet and fixed selling and administrative expenses total $29,500. A) Compute the total variable cost per unit. B) Calculate the total fixed expense for the year. C) Prepare a contribution margin income statement for the Head- First Company. D) Calculate the break-even point in units and dollars.
Transcribed Image Text:Head-First Company plans to sell 5,000 bicycle helmets at $75 each in the coming year. Product costs include: Direct materials per helmet - $ 30 Direct labor per helmet - 8 Variable factory overhead per helmet - 4 Total fixed factory overhead - 20,000 Variable selling expense is a commission of $3 per helmet and fixed selling and administrative expenses total $29,500. A) Compute the total variable cost per unit. B) Calculate the total fixed expense for the year. C) Prepare a contribution margin income statement for the Head- First Company. D) Calculate the break-even point in units and dollars.
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