SALES NEEDED TO EARN TARGET INCOME 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 earn operating income of

$81,900.

. Check your answer by preparing a contribution margin income statement based on the sales dollars calculated in Requirement 1.

Cornerstone Exercise