EXERCISE 7-24

fixed expenses
1. Break-even point (in units) = unit contribution margin

$40,000
= $10  $5 = 8,000 pizzas

unit contribution margin

2. Contribution-margin ratio = unit salesprice

$10  $5
= $10 = .5 (or 50%)

fixed expenses
3. Break-even point (in sales dollars) = contribution-marginratio

$40,000
= .5 = $80,000
 EXERCISE 7-26
Cost-volume-profit graph

Dollars per year

30,000 tickets x $10 = $300,000 Total revenue
$300,000

Break-even point: Total expenses

$250,000 20,000 tickets Profit
area
$210,000 Variable
$30,000 $200,000  expense
(at 30,000
$180,000 tickets)

$150,000

Loss area

$100,000 Annual
fixed
expenses
$180,000
$50,000

Tickets
sold per
5,000 10,000 15,000 20,000 25,000 30,000 year