Question

Can someone please help me solve this problem? This is one of the last problems of a massive set, and I cannot figure it out in order to move on.

If someone could walk me through this with a step by step flow chart that would be very helpful

Thanks

Head-First Company now sells both bicycle helmets and motorcycle helmets. Next year, Head- First expects to produce total revenue of $566,000 and incur total variable cost of $402,000. Total fixed cost is expected to be $57,900. Required: 1. Calculate the break-even point in sales dollars for Head-First. Round the contribution margin ratio to four decimal places and sales to the nearest dollar 2. Check your answer by preparing a contribution margin income statement

Answer 1

Requirement: 1 BEP Dollars sales – Fixed Expenses / Contribution margin Ratio Fixed expenses Contribution margin Ratio BEP Dollars sales 57900 0.2898 199793 Contribution margin ratio = (Total Revenue - Total variable cost)/Total Revenue Total Revenue - Total Variable cost 164000 Total Revenue 566000 Contribution margin Ratio 0.2898 Requirement: 2 Head First Company Contribution margin Income Statement At Break Even Sales Dollars Sales Less: Total Variable Costs Total Contribution margin Less:Total Fixed Cost Operating Income 199793 141893 57900 57900