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.

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jitumahi90 jitumahi90 · Answer 1 · 2020-02-27T19:06:38+01:00

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.

[tex]60\%\ of\ 11.99\\=\frac{60}{100}\times 11.99 =0.6\times 11.99\\=\$7.19.[/tex]

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

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

[tex]Breakeven=21,000\div (11.99-7.19)[/tex]

[tex]Breakeven=21,000\div 4.8[/tex]

[tex]Breakeven=4375.[/tex]

Therefore, 4375 pizzas have to sell to breakeven.