Variable Cost Ratio, Contribution Margin Ratio
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). Fixed factory overhead is $20,000 and fixed selling and administrative expense is $29,500.

Required: Be sure to read the instructions on each panel for additional guidance.
1. Calculate the variable cost ratio.
2. Calculate the contribution margin ratio.

Prepare a contribution margin income statement based on the budgeted figures for next year. In a column next to the income statement, show the percentages based on sales for sales, total variable cost, and total contribution margin.

Refer to the list below for the exact wording of text items within your income statement.

Amount Descriptions In CengageNOW, an Amount Description is a text entry other than an Account that has an amount associated with it.
Operating income
Operating loss
Total contribution margin
Total fixed expense

Total variable expense