Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. head-first company plans to sell 5,000 bicycle hel

Head-First Company plans to sell 5,000 bicycle helmets at $75 each in the coming year. Unit...

Free

80.2K

Verified Solution

Question

Accounting

Head-First Company plans to sell 5,000 bicycle helmets at $75each in the coming year. Unit variable cost is $45 (includes directmaterials, direct labor, variable factory overhead, and variableselling expense). Total fixed cost equals $49,500 (includes fixedfactory overhead and fixed selling and administrative expense).

Required:
1.Calculate the number of helmets Head-First must sell to earnoperating income of $81,900.
2.Check your answer by preparing a contribution margin incomestatement based on the number of units calculated.

Answer & Explanation Solved by verified expert
3.8 Ratings (610 Votes)

1

Calculate the number of helmets Head-First must sell to earn operating income of $81,900

Sales

75

100%

Less: variable cost

-45

-60%

Contribution margin

30

40%

number of helmets Head-First must sell to earn operating income of $81,900

=(fixed cost+ desired Income) / Contribution margin per unit

=(49500+81900) /30

=131400 /30

=4380 units

number of helmets Head-First must sell to earn operating income of $81,900 =4380 units

_________________________________________________

2

Check your answer by preparing a contribution margin income statement based on the number of units calculated.

Head-First Company

Contribution Margin Income Statement

Contribution margin income statement

Sales (4380 units 75)

328500

Total variable cost (4380 units 45)

-197100

Total contribution margin

131400

Total fixed cost

-49500

Operating income

81900

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Basic Math
1.2K views

Determine where the given function is concave up and where it is concave down. ​f(x)= 2x^3-6x^2-90x Find the...

Biology
1.2K views

2. (3pts) You are studying a single-pass transmembrane protein which is destined to the plasma membrane....

Chemistry
1.2K views

Determine whether the entropy increases or decreases in the given situations. a. A vapor that turned to...

Physics
1.2K views

What are the characteristics of an ideal radiation shield?

Physics
1.2K views

A galvanometer having a coil resistance 100 2 gives a full scale deflection when a...

Basic Math
1.2K views

That is the five number summary for the data sel 340 245 322 766 88...

Statistics
1.2K views

A An airline company claims in a recent Advertiseme that more than 94 of passenger...

Accounting
1.2K views

A cost that changes as volume changes, but at a nonconstant rate, is called a:...

Accounting
1.2K views

Entries for Factory Costs and Jobs Completed Entrepreneurial Publishing Inc. began printing operations on January...

Accounting
1.2K views

What is the UBIA of the following at sets a vehicle purchase for 30000 and...

Accounting
1.2K views

In relation to your planning for substantive procedures and collecting evidence for the accounts receivable...

Finance
1.2K views

Fast (c) Assets Liabilities Reserves $1,500,000 315,000,000 Securities Checicable deposits Money market...