Ella's Delicatessen has monthly fixed costs of £1800. She sells her soup for £1.15 a carton. The variable costs per carton are: (raw materials = 45p) and (labour = 20p). Calculate her breakeven output per month (show your workings)
Formula for Breakeven = Fixed costs / (selling price – variable cost). Fixed costs = £1800. Selling price = £1.15. Variable costs = 0.45 + 0.20 = £0.65. Selling price - variable cost = £1.15 – £0.65 = £0.50. Therefore, breakeven output = £1 800/£0.50 = 3 600 or 3 600 units per month
ET
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