Head- First Company plans to sell 5,000 bicycle helmets at $75 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).

Required:

1. Calculate the Contribution Margin per unit.

2. Calculate the break-even sales in units and in sales dollars.

3. Check your answer in no. 2 by preparing a contribution margin income statement based on the break-even units.

4. Calculate the Margin of Safety a) in terms of number of helmets and b) in terms of sales revenue

5. Calculate the number of helmets Head-First must sell to earn an operating income of $81,900.