Beth has dreams of opening a gourmet cupcake store. She does a break$-$even analysis to determine how many cupcakes she$$ll have to sell to break even on her investment. She$$s done the math, so she knows her fixed costs for one year are $$10,000$ and her variable cost per unit is $$0\mathrm{.}50.$ She$$s done a competitor study and some other calculations and determined her unit price to be $$6\mathrm{.}00.$

$$10,000/($$$6$ $$0\mathrm{.}50)=1,819$ cupcakes that Beth must sell in one year to break even

What is the limitation of this analysis?

This margin contributes to offsetting fixed costs.

That break$-$even analysis does not consider market demand.

The contribution margin is the difference $($more than zero$)$ between the product$$s selling price and its total variable cost.

Fixed costs are those that remain the same no matter how much product or service is sold.