Question

break even point and balance sheet

Freak-Even Point in Units Instructions Instructions Head-First Company plans to sell 5,200 bicycle helmets at $80 each in the coming year. Unit variable cost is $47 (includes direct materials, direct labor, variable factory overhead, and variable selling expense) Total fixed cost equals $55,440 (includes fixed factory overhead and fixed selling and administrative expense). Required: 1. Calculate the break-even nuraber of helmets. 2. Check your answer by preparing a contribution margin income statement based on the break-even units. Check My Work 3 more Check My Work uses remaining Previous Next Submit assignment for Grad

Answer 1

1. Calculation of Break-even number of helmets: Break-even Point in Units = Total Fixed Costs/Contribution Margin Per Unit Contribution Margin Per Unit = Selling Price Per Unit - Variable Cost Per Unit = $80 - $47 = $33.00 Break-even Point in Units = Total Fixed Costs/Contribution Margin Per Unit = $55,440/$33 = 1680 Helmets 2. Preparation of Contribution Margin Format Income Statement: Note that, at Breakeven Point, Operating Income will be zero. Sales (1680 x $80) Less: Variable Costs (1680 x $47) Contribution Margin Less: Fixed Costs Operating Income சச ச ச 134,400.00 (78,960.00) 55,440.00 (55,440.00)