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Problem - Head-First Company plans to sell 5,000 bicycle helmets at $75 each in the coming year. Unit variable cost is $45 (includes direct materials, direct labor, variable factory overhead, and variable selling expense). Total fixed cost equals $49,500 (includes fixed factory overhead and fixed selling and administrative expense).
Required -
Calculate the number of helmets Head-First must sell to earn operating income of $81,900.
Check your answer by preparing a contribution margin income statement based on the number of units calculated.
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