Head-First Company plans to sell 5,000 bicycle helmets at $75 each in the coming year.Variable cost is 60% of the sales price; contribution margin is 40% of the sales price. Totalfixed cost equals $49,500 (includes fixed factory overhead and fixed selling and administrative expense) Required:1. Calculate the sales revenue that Head-First must make to break even by using the breakeven point in sales equation.2. Check your answer by preparing a contribution margin income statement based on thebreak-even point in sales dollars.
Head-First Company plans to sell 5,000 bicycle helmets at $75 each in the coming year.Variable cost is 60% of the sales price; contribution margin is 40% of the sales price. Totalfixed cost equals $49,500 (includes fixed factory overhead and fixed selling and administrative expense) Required:1. Calculate the sales revenue that Head-First must make to break even by using the breakeven point in sales equation.2. Check your answer by preparing a contribution margin income statement based on thebreak-even point in sales dollars.
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter7: Cost-volume-profit Analysis
Section: Chapter Questions
Problem 29BEB: Sales Needed to Earn Target Income Chillmax Company plans to sell 3,500 pairs of shoes at 60 each in...
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Head-First Company plans to sell 5,000 bicycle helmets at $75 each in the coming year.
Variable cost is 60% of the sales price; contribution margin is 40% of the sales price. Total
fixed cost equals $49,500 (includes fixed factory overhead and fixed selling and administrative expense)
Required:
1. Calculate the sales revenue that Head-First must make to break even by using the breakeven point in sales equation.
2. Check your answer by preparing a contribution margin income statement based on the
break-even point in sales dollars.
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