Question

Break-Even Sales Dollars for a Multiple-Product FirmHead-First Company now sells both bicycle helmets and motorcycle helmets. Next year, Head-First expects to produce total revenue of $570,000 and incur total variable cost of $388,000. Total fixed cost is expected to be $58,900. Required:1. Calculate the break-even point in sales dollars for Head-First. (In your calculations, round the contribution margin ratio to four decimal places. Round your final answer to the nearest dollar.) $2. Check your answer by preparing a contribution margin income statement. If an amount is zero, enter "0". (Round calculations to four decimal places, and final answers to the nearest dollar.)

Answer 1

Answer:

Break Even Sales Volume in Dollars= $ 179792.43≅$ 180,000

Contribution Margin         $ 182,000

Explanation:

Break Even Sales Volume in Dollars= Fixed Costs/ Contribution Margin Ratio

Break Even Sales Volume in Dollars= Fixed Costs/ 1- (variable Costs/ Sales)

Break Even Sales Volume in Units = Fixed Costs/ Contribution Margin per Unit

                           

Break Even Sales Volume in Dollars = $58,900/1-( $388,000/$570,000)

Break Even Sales Volume in Dollars = $58,900/1-( 0.6744)

Break Even Sales Volume in Dollars = $58,900/0.3276

Break Even Sales Volume in Dollars = $ 179792.4298= $ 179792.43≅

$ 180,000

Sales                               $570,000

Less Total variable cost   $388,000

Contribution Margin         $ 182,000

Less Total fixed cost           $58,900

Net Profit                              $ 123,100