Question: College Pizza delivers pizzas to the dormitories and apartments near a major state university. The company's annual fixed expenses are $40,000. The sales price of a pizza is $10, and it costs the company $5 to make and deliver each pizza. (In the following exercises, ignore income taxes).
1. Using the contribution-margin approach, compute the company's break even point in units (pizzas).
2. What is the contribution-margin ratio?
3. Compute the break-even sales revenue. Use the contribution-margin ration in your calculation.
4. How many pizzas must the company sell to earn a target net profit of $65,000: Use the equation method.