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
proft=revenue-costs
profit=10u -5u-10,000
breakeven, profit is zero, so the number of units u
5u=10,000
u=2000
margin ratio: (10-5)/5=1.0 or 100 percent
65,000=10u-5u-10,000
55,000=5u
u=11,000
on a perday basis , 11,000/365=30.1 pizzas/day
