Brief Exercise 7-14 Variable Cost, Fixed Cost, Contribution Margin Income Statement

Objective 1 Example 7.1

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; fixed selling and administrative expense totals $29,500.

Required:

Calculate the total variable cost per unit.

Calculate the total fixed expense for the year.

Prepare a contribution margin income statement for Head-First Company for the coming year.