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Question - Rusty's Pies is a bakery that services the Helotes area. The company's annual fixed costs are $50,000. The sales price averages $15, and it costs the firm $7 to make and deliver each pie.
Required:
A. How many pies must Rusty's sell to break even?
B. How many pies must the company sell to earn a target profit of $100,000?
C. If budgeted sales total 12,000 pies, how much is the company's safety margin in dollars?
D. Rusty's assistant manager, an accounting major, has suggested that the firm should try to increase the contribution margin per pie. Explain the meaning of "contribution margin" in layman's terms.
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