Sales Needed to Earn Target Income

Head-First Company plans to sell 4,700 bicycle helmets at $80 each in the coming year. Variable cost is 61% of the sales price; contribution margin is 39% of the sales price. Total fixed cost equals $48,700 (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 $91,700 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.