How many pizzas must the company sell to earn a target

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University Pizza delivers pizzas to the residential colleges and flats near a major university. The company's annual fixed costs are $108 000. The sales price of a pizza is $20, and it costs the company $12 to make and deliver each pizza. (In the following requirements, ignore income taxes.)

Required:

Problem 1. Using the contribution margin approach, calculate the company's break-even point in units (pizzas).

Problem 2. What is the contribution margin ratio?

Problem 3. Calculate the break-even point in sales dollars. Use the contribution margin ratio in your calculation.

Problem 4. How many pizzas must the company sell to earn a target net profit of $60 000? Use the CVP equation.

Reference no: EM132967302

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