a)
\text{Break-even point in units} = \frac{\text{Fixed Costs}}{\text{Sales Price per Unit} - \text{Variable Cost per Unit}}
\text{Fixed Costs} = \$40,000
\text{Sales Price per Unit} = \$10
\text{Variable Cost per Unit} = \$5
\text{Break-even point in units} = \frac{\$40,000}{\$10 - \$5}
\text{Break-even point in units} = \frac{\$40,000}{\$5}
\text{Break-even point in units} = 8,000 \text{ pizzas}
b)
\text{Break-even point in sales dollars} = \text{Break-even point in units} \times \text{Sales Price per Unit}
\text{Break-even point in sales dollars} = 8,000 \text{ pizzas} \times \$10 \text{ per pizza}
\text{Break-even point in sales dollars} = \$80,000
c)
\text{Total Sales Needed} = \frac{\text{Fixed Costs} + \text{Target Profit}}{\text{Sales Price per Unit} - \text{Variable Cost per Unit}}
\text{Fixed Costs} = \$40,000
\text{Target Profit} = \$65,000
\text{Sales Price per Unit} = \$10
\text{Variable Cost per Unit} = \$5
\text{Total Sales Needed} = \frac{\$40,000 + \$65,000}{\$10 - \$5}
\text{Total Sales Needed} = \frac{\$105,000}{\$5}
\text{Total Sales Needed} = 21,000 \text{ pizzas}
Answers:
a) 8,000 \text{ pizzas}
b) \$80,000
c) 21,000 \text{ pizzas}