College Pizza delivers pizzas to the dormitories and apartments near a major state university. The company’s annual fixed expenses are $40,000. The sales price of a pizza is $10, and it costs the company $5 to make and deliver each pizza. (In the following requirements, ignore income taxes.)Required:1. Using the contribution-margin approach, compute the company’s break-even point in units (pizzas).2. What is the contribution-margin ratio?3. Compute the break-even sales revenue. Use the contribution-margin ratio in your calculation.4. How many pizzas must the company sell to earn a target profit of $65,000? Use the equation method.
College Pizza delivers pizzas to the dormitories and apartments near a major state university. The company’s annual fixed expenses are $40,000. The sales price of a pizza is $10, and it costs the company $5 to make and deliver each pizza. (In the following requirements, ignore income taxes.)Required:1. Using the contribution-margin approach, compute the company’s break-even point in units (pizzas).2. What is the contribution-margin ratio?3. Compute the break-even sales revenue. Use the contribution-margin ratio in your calculation.4. How many pizzas must the company sell to earn a target profit of $65,000? Use the equation method.
Chapter3: Cost-volume-profit Analysis
Section: Chapter Questions
Problem 6EA: Marlin Motors sells a single product with a selling price of $400 with variable costs per unit of...
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College Pizza delivers pizzas to the dormitories and apartments near a major state university. The company’s annual fixed expenses are $40,000. The sales price of a pizza is $10, and it costs the company $5 to make and deliver each pizza. (In the following requirements, ignore income taxes.)
Required:
1. Using the contribution-margin approach, compute the company’s break-even point in units (pizzas).
2. What is the contribution-margin ratio?
3. Compute the break-even sales revenue. Use the contribution-margin ratio in your calculation.
4. How many pizzas must the company sell to earn a target profit of $65,000? Use the equation method.
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