Head-First Company plans to sell 4,700 bicycle helmets at $75 each in the coming year. Unit variable cost is $45.75 (includes direct materials, direct labor, variable factory overhead, and variable selling expense). Fixed factory overhead is $21,000 and fixed selling and administrative expense is $28,700.

	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 cost
Total variable cost

1. Calculate the variable cost ratio.

Variable cost ratio _______________

2. Calculate the contribution margin ratio.

Contribution margin ratio __________________

Contribution Margin Income Statement 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 Sales 2 3 5