Head First Company plans to sell 5,000 bicycle helmets at $75 each in the coming year Variable cost is 60 percent of the sales price contribution margin is 40 percent of the sales price Total fixed cost equals $49,500 (includes fixed factory overhead and fixed selling and administrative expense) Re...

1 Sales for target income 2 Total fixed cost 11 Operating income ...

Head-First Company plans to sell 5,000 bicycle helmets at $75 each in the coming year. Variable cost

Question:

Head-First Company plans to sell 5,000 bicycle helmets at $75 each in the coming year. Variable cost is 60 percent of the sales price; is 40 percent 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 earn operating income of $81,900.
2. Check your answer by preparing a income statement based on the sales dollars calculated in Requirement 1. Contribution Margin
Contribution margin is an important element of cost volume profit analysis that managers carry out to assess the maximum number of units that are required to be at the breakeven point. Contribution margin is the profit before fixed cost and taxes...