Explanation:
1. The computation of the number of helmets sell to earn operating income is shown below:
= (Fixed expenses + target profit) ÷ (Contribution margin per unit)
where,
Contribution margin per unit = Selling price per unit - Variable expense per unit
= $75 - $40
= $30
So, the number of helmets sold is
= ($49,500 + $81,900) ÷ ($30)
= 4,380 helmets
2. And , the contribution margin income statement is presented below:
Sales (4,380 helmets × $75) $328,500
Less: Variable cost (4,380 helmets × $45) ($197,100)
Contribution margin $131,400
Less: Total fixed cost (49,500)
Net income $81,900
