Cornerstones of Managerial Accounting 6th Edition by Maryanne Mowen,Don Hansen ,Dan Heitger

Exercise 3

Break-Even Point in Sales Dollars Head-First Company plans to sell 5,000 bicycle helmets at $75 each in the coming year. Variable cost is 60% of the sales price; contribution margin is 40% of the sales price. Total fixed cost equals $49,500 (includes fixed factory overhead and fixed selling and administrative expense).
Required:
1) Calculate the sales revenue that Head-First must make to break even by using the breakeven point in sales equation.
2) Check your answer by preparing a contribution margin income statement based on the break-even point in sales dollars.