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Classify costs as variable costs, fixed costs, or mixed costs
Compute the contribution margin, the contribution margin ratio, and the unit contribution margin
Determine the break-even point and sales necessary to achieve a target profit
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You are selling pepperoni pizzas. This is your only product. You have the following costs:
| Fixed Costs | Variable Costs per Pizza |
| General Labor | $1,500 | Flour | $0.50 |
| Rent | $3,000 | Yeast | $0.05 |
| Insurance | $200 | Water | $0.01 |
| Advertising | $500 | Cheese | $3.00 |
| Utilities | $450 | Pepperoni | $2.00 |
| Total | $5,650 | Total | $5.56 |
What is the minimum price you should charge for the pizza and why?
If you set your pizza sales price to be $10, what is your contribution margin?
Calculate the break-even sales units and break-even sales dollars
Describe at least THREE ways to INCREASE profit (talking in terms of break-even)
Answer & Explanation
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