Head-First Company plans to sell 4,700 bicycle helmets at $75 each in the coming year. Variable cost is 64% of the sales price; contribution margin is 36% of the sales price. Total fixed cost equals $45,090 (includes fixed factory overhead and fixed selling and administrative expense).
1. Calculate the sales revenue that Head-First must make to break even by using the break-even point in sales equation.
2. Check your answer by preparing a contribution margin income statement based on the break-even point in sales dollars.