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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,
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). Break-even units equal 1,650.
1. Calculate the margin of safety in terms of the number of units.
2. Calculate the margin of safety in terms of sales revenue.
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