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:
I. 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 net profit of $65,000? Use the equation method.
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