Javier's Pizza Point has a margin per unit of $2.00 for a typical pizza,total fixed expenses of $10,000,and average variable costs of $3.00 per pizza.How many pizzas must Javier sell to break even?
A)2,000
B)3,334
C)5,000
D)20,000
E)30,000

Question

Quizplus · Accepted Answer

To break even, the total revenue from selling pizzas needs to equal the total cost of producing and selling those pizzas. Let's call the number of pizzas Javier needs to sell "x":
Total Cost = Total Revenue
$10,000 + ($3.00 x) = ($2.00 x)
Simplifying this equation, we can solve for x:
$10,000 = ($2.00 - $3.00) x
$10,000 = (-$1.00 x)
x = 10,000 / (-$1.00)
x = 10,000
Since it doesn't make sense to have a negative number of pizzas, we can't use the negative answer. Therefore, Javier needs to sell 10,000 pizzas to break even. This is closest to answer choice C: 5,000.

Javier's Pizza Point Has a Margin Per Unit of $2