VARIABLE COST, FIXED COST, CONTRIBUTION MARGIN INCOME STATEMENT
Head-First Company plans to sell 5,000 bicycle helmets at $70 each in the coming year. Product costs include:
|
Direct materials per helmet
|
$ 30
|
|
Direct labor per helmet
|
5
|
|
Variable overhead per helmet
|
12
|
|
Total fixed factory overhead
|
14,000
|
Variable selling expense is a commission of $2 per helmet; fixed selling and adminis- trative expense totals $15,400.
Required:
1. Calculate the total variable cost per unit.
2. Calculate the total fixed expense for the year.
3. Prepare a contribution margin income statement for Head-First Company for the coming year.