Question
Head-First Company now sells both bicycle helmets and motorcycle helmets. Next year, Head- First expects to produce total revenue of $575,000 and incur total variable
Head-First Company now sells both bicycle helmets and motorcycle helmets. Next year, Head- First expects to produce total revenue of $575,000 and incur total variable cost of $400,000. Total fixed cost is expected to be $60,500.
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. |
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 cost | |
Total variable cost |
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 .
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 |
|
|
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started