Assume that you are selling pizzas for $ 11.00 Your fixed costs (rent, salaries,

Question

Assume that you are selling pizzas for $      11.00 Your fixed costs (rent, salaries, utilities) are $         563 The food cost and other variable costs are 35 percent of the selling price. What is your breakeven point? Give the answer in units and dollars. Assume that you are selling pizzas for $      11.00 Your fixed costs (rent, salaries, utilities) are $         563 The food cost and other variable costs are 35 percent of the selling price. What is your breakeven point? Give the answer in units and dollars.

Explanation / Answer

Contribution margin = 1-35% = 65%

Contribution per unit = $11×65% = $7.15

Breakeven point in dollars:

= Fixed cost/Contribution margin

= $563/65%

= $866.15

Breakeven point in dollars:

= Fixed cost/Contribution margin per unit

= $563/$7.15

= 78.74 or 79 units

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