# Question

University Pizza delivers pizzas to the dormitories and apartments near a major state university. The company’s annual fixed expenses are $54,000. The sales price of a pizza is $10, and it costs the company $6 to make and deliver each pizza. (In the following requirements, ignore income taxes.)

Required:

1. 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 $60,000? Use the equation method.

Required:

1. 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 $60,000? Use the equation method.

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