BREAK-EVEN POINT IN UNITS FOR A MULTIPLE-PRODUCT FIRM Suppose that Head-First Company now sells both bicycle helmets and motorcycle helmets. The bicycle helmets are priced at $70 and have variable costs of $49 each. The motorcycle helmets are priced at $220 and have variable costs of $143 each. Total fixed costs for Head-First as a whole equals $54,600 (includes all fixed factory overhead and fixed selling and administrative expense). Next year, Head-First expects to sell 5,000 bicycle helmets and 1,000 motorcycle helmets.

Required:

. Form a package of bicycle and motorcycle helmets based on the sales mix expected for the coming year.

. Calculate the break-even point in units for bicycle helmets and for motorcycle helmets.

. Check your answer by preparing a contribution margin income statement.

Cornerstone Exercise