• University Pizza delivers pizzas to the residential colleges and flats near a major university. The companys annual fixed costs are $108 000. The sales price of a pizza is $20, and it costs the company $12 to make and deliver each pizza. (In the following requirements, ignore income taxes.)

  • Required: Using the contribution margin approach, calculate the companys break-even point in units (pizzas).

    • What is the contribution margin ratio?

    • Calculate the break-even point in sales dollars. Use the contribution margin ratio in your calculation.

    • How many pizzas must the company sell to earn a target net profit of $60 000? Use the CVP equation.