Question

The Muffin House produces and sells a variety of muffins. The selling price per dozen is​ $20, variable costs are​ $7 per​ dozen, and total fixed costs are​ $6,500. How many dozen muffins must The Muffin House sell to​ breakeven?

Answer 1

Answer:

The break even point in units 500 dozens

Explanation:

The break even point in the point of no profit or no loss. The break even point in units is calcualted by dividing the fixed costs for the peeiod by the contributon margin per units.

The formula for break even in units is,

Break even point in units = Fixed costs / Contribution margin per unit

Where Contribution margin per unit = Selling price - variable cost

Break even point in units for Muffin house is,

Brak even in unit = 6500 / (20 - 7)  = 500 units

Answer 2

Answer: Dozens of muffin to break even is 500

Explanation:

GIVEN the following ;

Selling price per dozen = $20

Variable cost per dozen = $7

Total fixed cost = $6500

Break even point (unit) in dozen :

(Total fixed cost ÷ Contribution margin)

Contribution margin per dozen = (selling price - variable cost)

$20 - $7 = $13

Therefore,

Break even points (unit) in dozen:

$6,500 ÷ $13 = 500 dozens

Therefore 500 dozens of muffins would have to be sold in other to break even(achieve a net profit of zero).