Bethany's Bakery sells freshly baked pies at a price of $12 each, has variable costs of $6 per pie produced, and has total fixed costs for the year of $14,400. The monthly break-even point for Bethany's Bakery is which of the following?

Question

Quizplus · Accepted Answer

Break-even is equal to the following formula: First, find the contribution margin by unit by taking price per unit minus variable cost per unit, or $12 F1F1F1S1?F1F1F10 $6 = $6. Next, find monthly break-even point by taking total fixed costs (14,400 ÷ 12 months = $1,200 per month) divided by contribution margin per unit: $1,200 ÷ $6 = 200 pies.

Bethany's Bakery Sells Freshly Baked Pies at a Price of $12