Head-First Company plans to sell 5,000 bicycle helmets at $75 each in the coming year. Unit variable cost is $45 (includes direct materials, direct labor, variable factory overhead, and variable selling expense). Total fixed cost equals $49,500 (includes fixed factory overhead and fixed selling and administrative expense). Required: 1. Calculate the number of helmets Head-First must sell to earn operating income of $81,900. 2. Check your answer by preparing a contribution margin income statement based on the number of units calculated.
Head-First Company plans to sell 5,000 bicycle helmets at $75 each in the coming year. Unit variable cost is $45 (includes direct materials, direct labor, variable factory overhead, and variable selling expense). Total fixed cost equals $49,500 (includes fixed factory overhead and fixed selling and administrative expense). Required: 1. Calculate the number of helmets Head-First must sell to earn operating income of $81,900. 2. Check your answer by preparing a contribution margin income statement based on the number of units calculated.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Head-First Company plans to sell 5,000 bicycle helmets at $75 each in the coming
year. Unit variable cost is $45 (includes direct materials, direct labor, variable factory
overhead, and variable selling expense). Total fixed cost equals $49,500 (includes
fixed factory overhead and fixed selling and administrative expense).
Required:
1. Calculate the number of helmets Head-First must sell to earn operating income
of $81,900.
2. Check your answer by preparing a contribution margin income statement based
on the number of units calculated.
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