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
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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
|
|
|
