Reference no: EM132502640

Suppose that Head-First Company now sells both bicycle helmets and motorcycle helmets. The bicycle helmets are priced at $77 and have variable costs of $45 each. The motorcycle helmets are priced at $230 and have variable costs of $135 each. Total fixed cost for Head-First as a whole equals $66,500 (includes all fixed factory overhead and fixed selling and administrative expense). Next year, Head-First expects to sell 5,200 bicycle helmets and 2,080 motorcycle helmets.

Required:

Question 1: Form a package of bicycle and motorcycle helmets based on the sales mix expected for the coming year.

Question 2: Calculate the break-even point in units for bicycle helmets and for motorcycle helmets.

Product                     Price                  Unit Variable Cost                Unit CM                   Salesmix package         CM

Bicycle helmet           $77                        $ 45                         $32                       ???                  $??????

Motorcycle helmet      $230                   $135                      $95                             ???                         $??????

Package total                                                                                                                                    $????

Break-Even Bicycle Helmets= 950units

Break-Even Motorcycle Helmets= 380units