Sales Needed to Earn Target Income

Head-First Company plans to sell 5,100 bicycle helmets at $72 each in the coming year. Variable cost is 62% of the aales price; contribution margin is 38% of the sales price. Total fixed cost equals $$50,000 ( 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 $73,120 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 rwquirement 1.