Question

Head-First Company now sells both bicycle helmets and motorcycle helmets. Next year, Head- First expects to produce total revenue of $585,000 and incur total variable cost of $372,000. Total fixed cost is expected to be $60,000.

	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. 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. X Break-Even Sales Dollars 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. The break-even point in sales equals . 2. 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. Head-First Company Contribution Margin Income Statement At Break-Even Sales Dollars 1 2 3 4 5

Answer 1

Requirement 1

Break-even sales

164789

Working

Sales revenue	$     585,000.00
Variable costs	$     372,000.00
Contribution margin	$     213,000.00
Contribution margin Ratio	36.4103%
Fixed cost	$       60,000.00
Break-even sales (60000/36.4103%)	$     164,788.54

Requirement 2

Head-First Company
Contribution Margin Income Statement
At Break-Even Sales Dollars
Sales revenue	$        164,789
Variable costs	$        104,789
Contribution margin	$          60,000
Fixed cost	$          60,000
Net operating income	$                   -