Madi is starting a new business making pies. She needs to work out how many pies she needs to sell to break even. Madi plans the pies for textsterling1.25 each. The ingredients and packaging costs 50p and her fixed costs are textsterling1, 524 per month. How many units would Madi need to sell to break-even?

BREAK EVEN POINT

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Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]

Madi is starting a new business making pies. She needs to work out how many pies she needs to sell to break even. Madi plans the pies for £1.25 each. The ingredients and packaging costs 50p and her fixed costs are £1, 524 per month. How many units would Madi need to sell to break-even?

A	75 pies
B	2032 pies
C	£75
D	£2032

Explanation:

Detailed explanation-1: -To calculate the break-even point in units use the formula: Break-Even point (units) = Fixed Costs ÷ (Sales price per unit – Variable costs per unit) or in sales dollars using the formula: Break-Even point (sales dollars) = Fixed Costs ÷ Contribution Margin.

Detailed explanation-2: -A company’s breakeven point is the point at which its sales exactly cover its expenses. Fixed Costs ÷ (Price-Variable Costs) = Breakeven Point in Units.

Detailed explanation-3: -Break-even Sales = Total Fixed Costs / (Contribution Margin) Contribution Margin = 1-(Variable Costs / Revenues)

There is 1 question to complete.

ECONOMICS

COST ACCOUNTING

BREAK EVEN POINT