Sophia's Delivery Service charges a $56 service fee. The variable cost per service run is $19. The company's fixed expenses amount to $6000. If the operating income equals fixed expenses, what is the breakeven point in sales revenue for Sophia's Delivery Service?

Question

Quizplus · Accepted Answer

The breakeven point occurs when total revenue equals total costs (fixed + variable). The fixed expenses are $6000, and the contribution margin per service run is $56 - $19 = $37. To find the breakeven point in units, divide the fixed expenses by the contribution margin: $6000 / $37 ≈ 162.16. The breakeven sales revenue is 162.16 units * $56 = $9128.96, which rounds to $9128.

Sophia's Delivery Service Charges a $56 Service Fee