Head-First Company plans to sell 5,800 bicycle helmets at $76 each in the coming year. Unit variable cost is $44 (includes direct materials, direct labor, variable factory overhead, and variable selling expense). Total fixed cost equals $49,600 (includes fixed factory overhead and fixed selling and administrative expense). Required: 1. Calculate the number of helmets Head-First must sell to earn operating income of $89,600. 2. Check your answer by preparing a contribution margin income statement based on the number of units calculated. X Contribution Margin Income Statement Shaded cells have feedback. 2. Check your answer by preparing a contribution margin income statement,
Contribution Margin Per unit = Selling price - variable cost per unit | ||||||
=$76-44 | ||||||
=$32 | ||||||
Number of helmets need to be sold for earning $89600 | ||||||
=(desired profit+fixed cost)/ contribution margin per unit | ||||||
=($89600+49600)/32 | ||||||
=4350 | Helmets | |||||
Contribution margin income statement | ||||||
Sales | $ 3,30,600 | |||||
(4350*$76 each) | ||||||
Less: | ||||||
Variable cost | $ 1,91,400 | |||||
(4350*$44 each) | ||||||
Contribution margin | $ 1,39,200 | |||||
Less: | ||||||
Fixed Cost | $ 49,600 | |||||
Operating profit | $ 89,600 | |||||
Head-First Company plans to sell 5,800 bicycle helmets at $76 each in the coming year. Unit...
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