BREAK-EVEN POINT IN SALES DOLLARS Head-First Company plans to sell 5,000 bicycle helmets at $70 each in the coming year.

Variable cost is 70 percent of the sales price; contribution margin is 30 percent of sales price. Total fixed cost equals $29,400 (includes fixed factory overhead and fixed selling and administrative expense).

Required:

. Calculate the sales revenue that Head-First must make to break even by using the break-even point in sales equation.

. Check your answer by preparing a contribution margin income statement based on the break-even point in sales dollars.

Cornerstone Exercise