Question
Suppose that Head-First Company now sells both bicycle helmets and motorcycle helmets. The bicycle helmets are priced at $74 and have variable costs of $48
Suppose that Head-First Company now sells both bicycle helmets and motorcycle helmets. The bicycle helmets are priced at $74 and have variable costs of $48 each. The motorcycle helmets are priced at $215 and have variable costs of $130 each. Total fixed cost for Head-First as a whole equals $60,000 (includes all fixed factory overhead and fixed selling and administrative expense). Next year, Head-First expects to sell 4,850 bicycle helmets and 1,940 motorcycle helmets.
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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.
2. Calculate the break-even point in units for bicycle helmets and for motorcycle helmets.
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