VARIABLE COST, FIXED COST, CONTRIBUTION MARGIN INCOME STATEMENT Head-First Company plans to sell 5,000 bicycle helmets at $70 each in the coming year.

Product costs include:

Direct materials per helmet $ 30 Direct labor per helmet 5 Variable overhead per helmet 12 Total fixed factory overhead 14,000 Variable selling expense is a commission of $2 per helmet; fixed selling and administrative expense totals $15,400.

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.

Cornerstone Exercise