Carlotta owns and manages the Carlite Car Wash. She charges $8 per car wash. Her fixed costs are $600 per month, while her variable costs per car wash amount to $2. Carlotta must wash 60 cars to break even.

Question

Quizplus · Accepted Answer

Carlotta's break-even point is calculated by dividing her fixed costs by the contribution margin per car wash. The contribution margin is $8 (price) - $2 (variable cost) = $6. Therefore, $600 / $6 = 100 cars to break even.

Carlotta Owns and Manages the Carlite Car Wash