Head-First Company plans to sell 4,400 bicycle helmets at $70 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 $78,500 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.