The company annual fixed costs are birr 40,000.

The sale price of a piizza is birr10.& it costs the copany birr 5 to make and deliver each pizza.
1,What is the company's break even point in units?
2,compute the contribution margin ration.
3,how many pizzas must the company sell to earn a target profit of birr 65,000?

1 answer

  1. proft=revenue-costs
    profit=10u -5u-10,000
    breakeven, profit is zero, so the number of units u
    margin ratio: (10-5)/5=1.0 or 100 percent
    on a perday basis , 11,000/365=30.1 pizzas/day

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