Mix sweet shop bakes and sells pies. mix has annual fixed costs of $880,000 and a variable cost per pie of $7.50. each pie sells for $15.50 each. the firm expects to sell 500,000 pies annually. what is the break−even point in sales dollars? select one:
a. 190,440
b. 110,000
c. 200,000
d. 280,000

Break-even point in units= 110,000

Break-even point in dollars= $1,705,00

Explanation:

Giving the following information:

Mix has annual fixed costs of $880,000 and a variable cost per pie of $7.50. Each pie sells for $15.50 each. The firm expects to sell 500,000 pies annually.

We need to use the following formula:

Break-even point (dollars)= fixed costs/ contribution margin ratio

Break-even point (dollars)= 880,000/ [(15.5 - 7.5)/15.5]= $1,705,000

Break-even point (units)= fixed costs/ contribution margin

Break-even point= 880,000/ (15.5 - 7.5)= 110,000 units