Break-Even Point in Units for a Multiple-Product Firm

Instructions:

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 $47 each. The motorcycle helmets are priced at $220 and have variable costs of $145 each. Total fixed cost for Head-First as a whole equals $57,000 (includes all fixed factory overhead and fixed selling and administrative expense). Next year, Head-First expects to sell 4,850 bicycle helmets and 1,940 motorcycle helmets.

Required:

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

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.