Head -First Company plans to sell 5,000 bicycle helmets at $75 each in the coming year. Variable cost is 60% of the sale price; contribution margin is 40% of the sale price. Total fixed cost equals $49,500 (includes fixed factory overhead and fixed selling and administrative expense).
1. Calculate the sales revenue that Head-First must make to earn operating income of $81,900.
2. Check your answer by preparing a contribution margin income statement based on the sales dollars calculated in requirement 1.