Suppose that Head First Company now sells both bicycle helmets and motorcycle helmets. The bicycle helmets are priced at $70 and have variable costs of $49 each. The motorcycle helmets are priced at $220 and have variable costs of $143 each. Total fixed costs for Head First as a whole equals $54,600 (includes all fixed factory overhead and fixed selling and administrative expense). Next year, Head First expects to sell 5,000 bicycle helmets and 1,000 motorcycle helmets.
Required:
1. Form a package of bicycle and motorcycle helmets based on the sales mix expected for the coming year.
2. Calculate the break even point in units for bicycle helmets and for motorcycle helmets.
3. Check your answer by preparing a contribution margin income statement.
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