Farmtown Flatbread sells packages of flatbreads for $4

Finance May 08, 2021

Farmtown Flatbread sells packages of flatbreads for $4.00, with a variable cost of $1.70. The company's total fixed costs are $805,000.
7) Calculate Farmtown Flatbread's operating breakeven point in terms of units (enter numbers only).

Expert Solution

Computation of Operating Breakeven Point in term of Units:

Breakeven Point = Fixed Cost/Contribution Margin per Unit

= $805,000/$2.30

Breakeven Point = 350,000 units

Note:

Contribution Margin per Unit = Sales price per unit - Variable Cost per Unit

= $4 - $1.70

= $2.30

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