Question

Sophia's Delivery Service charges a $55 service fee. The variable cost per service run is $22. The company's fixed expenses amount to $6,200. If the operating income equals fixed expenses, what is the breakeven point in sales revenue for Sophia's Delivery Service

Answer 1

The breakeven in sales value is $10,333.33

Step-by-step explanation:

Breakeven in sales=fixed expenses/contribution margin*service fee charged

Fixed expenses is $6,200

Contribution margin=service fee per run-variable cost per run

service fee per run is $55

variable cost per run is $22

contribution margin per run=$55-$22=$33

breakeven in sales=$6,200/$33*$55

breakeven in sales=187.8787879 *$55

breakeven in sales value=$10,333.33

Break-even sales is the sales revenue expected when the company makes no profit and no loss

Answer 2

the breakeven point in sales revenue for Sophia's Delivery Service is $10,333

Step-by-step explanation:

Break even point is the point where a firm neither makes a Profit nor a loss

Break even point (Sales Revenue) = Fixed Costs / Contribution Margin Ratio

= $6,200 / (($55- $22)/$55)

= $6,200/ 0.6

= $10,333