Ferdinand runs a pie shop in a busy metropolis. He sells his fresh pies for $7, but it costs him $2.50 to make them. The cooking equipment in his shop cost him $46,000. How many pies does Ferdinand need to sell to make $50,000 annually?
A) 33,000 pies
B) 16,000 pies
C) 8,500 pies
D) 21,333 pies
E) 12,645 pies

Question

Quizplus · Accepted Answer

Break-even quantity = Fixed cost/(Actual unit sales price - Unit variable cost) = ($46,000 + $50,000)/($7 - $2.5) = 21,333 pies. The break-even point quantity is the quantity at which total revenue equals total cost, and then profit occurs for additional sales.

Ferdinand Runs a Pie Shop in a Busy Metropolis