a If a bakery had a monthly total fixed cost 50000 due to re

a) If a bakery had a monthly total fixed cost $50,000 due to rent, utilities, and overhead; and a variable cost of $5.00 for every cake produced; how many cakes must be sold at $25.00 in order for the company to break even? (10) 4. b)Suppose the same bakery had a monthly total fixed cost $40,000 due to rent, utilities, and overhead; and a variable cost of $8.00 for every cake produced; how many cakes must be sold at S25.00 in order for the company to break even? (10)

Solution

Break even point = fixed costs / ( price per unit- variable cost per unit)

a) Break even point = 50,000/ (25-5) = 50,000/20 = 2500

Hence, 2500 cakes must be sold to bring the company at break even point.

b) Break even point = 40,000/ (25-8) = 40,000/17 = 2352.9

Hence, 2353 cakes must be sold to bring the company at break even point.