Frank is thinking of entering the pizza market in the area surrounding his neighbourhood. He is going to call his company "Rizza Pizza". He realizes that the food industry is extremely competitive. Frank is willing to take the risk because of the high profit margin. His pizza will be sold at $10 per pizza. Variable costs are $3.00 for rae materials and $2.00 for direct labour per pizza. His fixed costs are estimated at $250,000. He currently has the capacity to make and sell 100,000 pizza during the first year. In order to justify spending his time at work, Frank needs to have 20% annual of his investment $250,000 per year.

A. What is the break even in units and in revenue?

B. How many pizza must Fred sell to achieve his target income?

C. What is the margin of safety in dollar given his target sales?