   Chapter 7, Problem 20BEA ### Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773

#### Solutions

Chapter
Section ### Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773
Textbook Problem
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# Break-Even Sales Dollars for a Multiple-Product FirmHead-First Company now sells both bicycle helmets and motorcycle helmets. Next year, Head-First expects to produce total revenue of $570,000 and incur total variable cost of$388,000. Total fixed cost is expected to be $58,900.Required: 1. Calculate the break-even point in sales dollars for Head-First. (Note: Round the contribution margin ratio to four decimal places and sales to the nearest dollar.) 2. Check your answer by preparing a contribution margin income statement. 1. To determine Compute break-even point in sales dollars. Explanation Break-Even Point: The point or situation where the amount of total cost is equivalent to total revenue is known as the break-even point. It is the point where there is no loss or no profit. Use the following formula to calculate the break-even point in sales dollars: Break-even point in sales dollars=Fixed costsContribution margin ratio1 Substitute$58,900 for fixed costs and 31.93% for contribution margin ratio in the above formula.

Break-even point in sales dollars=$58,90031.93%=$184,466

Therefore, the break-even point in sales dollars is \$184,466

2.

To determine

Make contribution margin income statement.

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