Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Assignment due on 06.20.2016 at 11:30PM Please see the attached 11 question set. Head-First Company plans to sell 5,100 bicycle helmets at $78 each in

image text in transcribed

Assignment due on 06.20.2016 at 11:30PM

Please see the attached 11 question set.

image text in transcribed Head-First Company plans to sell 5,100 bicycle helmets at $78 each in the coming year. Product costs include: Direct materials per helmet $ 32 Direct labor per helmet 5.50 Variable factory overhead per helmet 5.25 Total fixed factory overhead 21,000 Variable selling expense is a commission of $3.40 per helmet; fixed selling and administrative expense totals $29,800. Required: 1. Calculate the total variable cost per unit. 2. Calculate the total fixed expense for the year. 3. Prepare a contribution margin income statement for Head-First Company for the coming year. Refer to the list below for the exact wording of an amount description within your income statement. Amount Descriptions Operating income Operating loss Sales Total contribution margin Total fixed expense Total variable expense 1. Calculate the total variable cost per unit. Round your answer to two decimal places. Variable cost per unit $ 2. Calculate the total fixed expense for the year. Total fixed expense for the year $ 3. Prepare a contribution margin income statement for Head-First Company for the coming year. Refer to the list of Amount Descriptions for the exact wording of text items within your income statement. Round your per unit answers to two decimal places. Head-First Company Contribution Margin Income Statement For the Coming Year Total 1 Per Unit 2 3 4 5 6 Head-First Company plans to sell 4,400 bicycle helmets at $84 each in the coming year. Unit variable cost is $45 (includes direct materials, direct labor, variable factory overhead, and variable selling expense). Total fixed cost equals $60,450 (includes fixed factory overhead and fixed selling and administrative expense). Required: 1. Calculate the break-even number of helmets. 2. Check your answer by preparing a contribution margin income statement based on the break-even units. Refer to the list below for the exact wording of an amount description within your income statement. Amount Descriptions Operating income Operating loss Sales Total contribution margin Total fixed expense Total variable expense 1. Calculate the break-even number of helmets. helmets Head-First Company Contribution Margin Income Statement At Break-Even Point 1 2 3 4 5 Head-First Company plans to sell 4,400 bicycle helmets at $84 each in the coming year. Unit variable cost is $50.40 (includes direct materials, direct labor, variable factory overhead, and variable selling expense). Fixed factory overhead is $19,000 and fixed selling and administrative expense is $30,300. Required: 1. Calculate the variable cost ratio. 2. Calculate the contribution margin ratio. 3. Prepare a contribution margin income statement based on the budgeted figures for next year. In a column next to the income statement, show the percentages based on sales for sales, total variable cost, and total contribution margin. Refer to the list below for the exact wording of text items within your income statement. Amount Descriptions Operating income Operating loss Sales Total contribution margin Total fixed expense Total variable expense 1. Calculate the variable cost ratio. Variable cost ratio % 2. Calculate the contribution margin ratio. Contribution margin ratio % 3. Prepare a contribution margin income statement based on the budgeted figures for next year. In a column next to the income statement, show the percentages based on sales for sales, total variable cost, and total contribution margin. Refer to the list of Amount Descriptions for the exact wording of text items within your income statement. Head-First Company Contribution Margin Income Statement For the Coming Year Percent of 1 Sales 2 3 4 5 6 Head-First Company plans to sell 4,200 bicycle helmets at $67 each in the coming year. Variable cost is 66% of the sales price; contribution margin is 34% of the sales price. Total fixed cost equals $42,585 (includes fixed factory overhead and fixed selling and administrative expense). Required: 1. Calculate the sales revenue that Head-First must make to break even by using the break-even point in sales equation. 2. Check your answer by preparing a contribution margin income statement based on the break-even point in sales dollars. Amount Descriptions Refer to the list below for the exact wording of text items within your income statement. Amount Descriptions Operating income Operating loss Sales Total contribution margin Total fixed expense Total variable expense Sales Revenue 1. Calculate the sales revenue that Head-First must make to break even by using the break-even point in sales equation. $ Contribution Margin Income Statement 2. Check your answer by preparing a contribution margin income statement based on the break-even point in sales dollars. Refer to the list of Amount Descriptions for the exact wording of text items within your income statement. Head-First Company Contribution Margin Income Statement At Break-Even Point 1 2 3 4 5 Head-First Company plans to sell 4,200 bicycle helmets at $71 each in the coming year. Unit variable cost is $44 (includes direct materials, direct labor, variable factory overhead, and variable selling expense). Total fixed cost equals $50,000 (includes fixed factory overhead and fixed selling and administrative expense). Required: 1. Calculate the number of helmets Head-First must sell to earn operating income of $67,990. 2. Check your answer by preparing a contribution margin income statement based on the number of units calculated. Amount Descriptions Refer to the list below for the exact wording of text items within your income statement. Amount Descriptions Operating income Operating loss Sales Total contribution margin Total fixed expense Total variable expense Number of Helmets 1. Calculate the number of helmets Head-First must sell to earn operating income of $67,990. helmets Contribution Margin Income Statement 2. Check your answer by preparing a contribution margin income statement based on the number of units calculated. Refer to the list of Amount Descriptions for the exact wording of text items within your income statement. Head-First Company Contribution Margin Income Statement Based on Helmets Sold 1 2 3 4 5 Head-First Company plans to sell 4,400 bicycle helmets at $78 each in the coming year. Variable cost is 60% of the sales price; contribution margin is 40% of the sales price. Total fixed cost equals $50,300 (includes fixed factory overhead and fixed selling and administrative expense). Required: 1. Calculate the sales revenue that Head-First must make to earn operating income of $93,220 by using the point in sales equation. 2. Check your answer by preparing a contribution margin income statement based on the sales dollars calculated in Requirement 1. Amount Descriptions Refer to the list below for the exact wording of text items within your income statement. Amount Descriptions Operating income Operating loss Sales Total contribution margin Total fixed expense Total variable expense Sales Revenue 1. Calculate the sales revenue that Head-First must make to earn operating income of $93,220 by using the point in sales equation. $ Contribution Margin Income Statement 2. Check your answer by preparing a contribution margin income statement based on the sales dollars calculated in Requirement 1. Refer to the list of Amount Descriptions for the exact wording of text items within your income statement. Head-First Company Contribution Margin Income Statement Based on Sales Dollars 1 2 3 4 5 Suppose that Head-First Company now sells both bicycle helmets and motorcycle helmets. The bicycle helmets are priced at $77 and have variable costs of $45 each. The motorcycle helmets are priced at $230 and have variable costs of $135 each. Total fixed cost for Head-First as a whole equals $66,500 (includes all fixed factory overhead and fixed selling and administrative expense). Next year, HeadFirst expects to sell 5,200 bicycle helmets and 2,080 motorcycle helmets. Required: 1. Form a package of bicycle and motorcycle helmets based on the sales mix expected for the coming year. Required: 2. Calculate the break-even point in units for bicycle helmets and for motorcycle helmets. 3. Check your answer by preparing a contribution margin income statement. Amount Descriptions Refer to the list below for the exact wording of text items within your income statement. Amount Descriptions Operating income Operating loss Sales Total contribution margin Total fixed expense Total variable expense Sales Mix and Break-Even Point 1. Form a package of bicycle and motorcycle helmets based on the sales mix expected for the coming year. Product Bicycle Price Unit Variable $ Cost $ Unit Contribution Package Sales Mix Contribution Margin $ Margin $ helmet Motorcycle helmet Package $ total 2. Calculate the break-even point in units for bicycle helmets and for motorcycle helmets. Break-Even Bicycle Helmets Break-Even Motorcycle Helmets Contribution Margin Income Statement 3. Check your answer by preparing a contribution margin income statement. Refer to the list of Amount Descriptions for the exact wording of text items within your income statement. Head-First Company Contribution Margin Income Statement At Break-Even Point 1 2 3 4 5 Head-First Company now sells both bicycle helmets and motorcycle helmets. Next year, Head- First expects to produce total revenue of $585,000 and incur total variable cost of $372,000. Total fixed cost is expected to be $60,000. Required: 1. Calculate the break-even point in sales dollars for Head-First. Round the contribution margin ratio to four decimal places and sales to the nearest dollar. 2. Check your answer by preparing a contribution margin income statement. Amount Descriptions Refer to the list below for the exact wording of text items within your income statement. Amount Descriptions Operating income Operating loss Sales Total contribution margin Total fixed expense Total variable expense Break-Even Sales Dollars 1. Calculate the break-even point in sales dollars for Head-First. Round the contribution margin ratio to four decimal places and sales to the nearest dollar. The break-even point in sales equals $ . Contribution Margin Income Statement 2. Check your answer by preparing a contribution margin income statement. Refer to the list of Amount Descriptions for the exact wording of text items within your income statement. Head-First Company Contribution Margin Income Statement At Break-Even Sales Dollars 1 2 3 4 5 Margin of Safety Head-First Company plans to sell 5,240 bicycle helmets at $70 each in the coming year. Unit variable cost is $45 (includes direct materials, direct labor, variable factory overhead, and variable selling expense). Total fixed cost equals $49,500 (includes fixed factory overhead and fixed selling and administrative expense). Break-even units equal 1,980. Required: 1. Calculate the margin of safety in terms of the number of units. units 2. Calculate the margin of safety in terms of sales revenue. $ Head-First Company plans to sell 5,000 bicycle helmets at $75 each in the coming year. Unit variable cost is $50 (includes direct materials, direct labor, variable factory overhead, and variable selling expense). Total fixed cost equals $49,500 (includes fixed factory overhead and fixed selling and administrative expense). Operating income at 5,000 units sold is $75,500. Required: Calculate the degree of operating leverage. (Round your answer to the nearest tenth.) Head-First Company had planned to sell 5,000 bicycle helmets at $74 each in the coming year. Unit variable cost is $50 (includes direct materials, direct labor, variable factory overhead, and variable selling expense). Total fixed cost equals $49,500 (includes fixed factory overhead and fixed selling and administrative expense). Operating income at 5,000 units sold is $70,500. The degree of operating leverage is 1.7. Now Head-First expects to increase sales by 10% next year. Required: 1. Calculate the percent change in operating income expected. % 2. Calculate the operating income expected next year using the percent change in operating income calculated in Requirement 1. $

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Introductory Financial Accounting for Business

Authors: Thomas Edmonds, Christopher Edmonds

1st edition

1260299449, 978-1260299441

More Books

Students also viewed these Accounting questions