Samira's Smoothies has fixed costs of $1600 per month. The only variable costs Samira incurs are for the ingredients and labour needed to produce smoothies. These cost $1.50 per drink. Samira sells her delicious concoctions for $3.50 each. How many smoothies will Samira have to sell per month to break even?

Question

Quizplus · Accepted Answer

To calculate the break-even point in units, we use the formula: Break-even point in units = Fixed Costs / (Selling Price per Unit - Variable Cost per Unit). Plugging in Samira's numbers: $1600 / ($3.50 - $1.50) = $1600 / $2 = 800. Therefore, Samira needs to sell 800 smoothies per month to break even.

Samira's Smoothies Has Fixed Costs of $1600 Per Month