Suppose that Head-First Company now sells both bicycle helmets and motorcycle helmets. The bicycle helmets are priced at $77 and have variable costs of $45 each. The motorcycle helmets are priced at $230 and have variable costs of $135 each. Total fixed cost for Head-First as a whole equals $66,500 (includes all fixed factory overhead and fixed selling and administrative expense). Next year, Head-First expects to sell 5,200 bicycle helmets and 2,080 motorcycle helmets.

	Required:
1.	Form a package of bicycle and motorcycle helmets based on the sales mix expected for the coming year.
2.	Calculate the break-even point in units for bicycle helmets and for motorcycle helmets.
3.	Check your answer by preparing a contribution margin income statement.

1. Form a package of bicycle and motorcycle helmets based on the sales mix expected for the coming year.

Product

Price

Unit Variable Cost

Unit Contribution Margin

Sales Mix

Package Contribution Margin

Bicycle helmet

Motorcycle helmet

Package total

Points:

6 / 11

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Check My Work

See Cornerstone 4.7.

2. Calculate the break-even point in units for bicycle helmets and for motorcycle helmets.

Break-Even Bicycle Helmets
Break-Even Motorcycle Helmets

3. Check your answer by preparing a contribution margin income statement. Refer to the list of Amount Descriptions for the exact wording of text items within your income statement.

Question not attempted.

Score: 0/51

Head-First Company

Contribution Margin Income Statement

At Break-Even Point

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