Question

A restaurant sells pizza at a rate of $10/slice. Expenses for the restaurant include raw material for pizza at $5 per slice, $100 as monthly rental and $50 monthly as insurance. How many slices should the restaurant sell in a month to break even?
a) 10
b) 30
c) 50
d) 25

Answer 1

Revenue per slice = \$10. Variable cost per slice = \$5. Contribution per slice = \$10 − \$5 = \$5.
Fixed costs = \$100 + \$50 = \$150.
Break-even quantity = Fixed costs / Contribution per slice = 150 / 5 = 30 slices.

Answer: b) 30.