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Question

ghmentMain.do?invoker &takeAssignmentSessionLocator-assignment-take;&inprogress-false; eBook Show Me How Calculator Print Item Units to Earn Target Income Amount Descriptions Number of Helmets Instructions Head-First Companyplans to sell 4,70 bicycle helmets at 580 each in the coming year Unt variable cost is S46 (includes direct materials,dfrect labor variable factory overhead, and variable selling expense). Total fixed cost equals $48,700 (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 $97,500 2. Check your answer by preparing a contribution margin income statement based on the number of units calculated Shaded cells have feedback Number of Helmets 1. Calculate the number of helmets Head-First must sell to earn operating income of $97,500 4300 V helmets Points1/1

Explanation / Answer

Selling price per unit: $ 80 per unit Vvariable cost per unit: $ 46 per unit Contribution margin per unit: Selling price - Variable cost = 80-46 = 34 per unit Total Fixed cost: $ 48,700 Desired income: $ 97500 Desired contribution: Desired income+ Fixed cost = 48700+97500 = $146,200 Number of units to be sold to earn $97500 : Desired Contribution/ Contribution margin per unit 146200 /34 = 4300 units CONTRIBUTION MARGIN INCOME STATEMENT Sales revenue (4300 units @ 80) 344000 Less: variable ccost (4300 units @ 46) 197800 Contribution margin 146200 Less: Fixed cost 48700 Net operating income 97,500

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