Question

if we sell pizzas for $11.99 and our business' variable costs are 60% of the selling price, and we have fixed costs of $21,000 each month, can you determine how many pizzas we have to sell to breakeven? Ignore taxes. Show your work, or explain why this question can't be solved.

Answer 1

Answer:

4375 pizzas have to sell to breakeven.

Explanation:

Given:

If we sell pizzas for $11.99 and our business' variable costs are 60% of the selling price, and we have fixed costs of $21,000 each month.

Now, to find pizzas to sell to breakeven.

Fixed costs = $21,000.

Sale price = $11.99.

Variable costs:

60% of the selling price.

$60\%\ of\ 11.99\\=\frac{60}{100}\times 11.99 =0.6\times 11.99\\=\ 7.19.$

Now, to get the number of pizzas to sell to breakeven we put formula:

Breakeven = Fixed Costs ÷ (Sale price – Variable costs )

$Breakeven=21,000\div (11.99-7.19)$

$Breakeven=21,000\div 4.8$

$Breakeven=4375.$

Therefore, 4375 pizzas have to sell to breakeven.