Reference no: EM133047326

Question - Suppose that Head-First Company now sells both bicycle helmets and motorcycle helmets. The bicycle helmets are priced at $72 and have variable costs of $42 each. The motorcycle helmets are priced at $210 and have variable costs of $145 each. Total fixed cost for Head-First as a whole equals $44,800 (includes all fixed factory overhead and fixed selling and administrative expense). Next year, Head-First expects to sell 4,800 bicycle helmets and 1,920 motorcycle helmets.

Required -

1. Form a package of bicycle and motorcycle helmets based on the sales mix expected for the coming year.

2. Calculate the break-even point in units for bicycle helmets and for motorcycle helmets.

3. Check your answer by preparing a contribution margin income statement.