BakeHealth Itd sells low sugar vegan cake baskets to schools around Hertfordshire. The fixed cost of operating the bakery for a month totals E3,000 Each cake basket requires materials that cost E40 Each cake basket requires 2 hour to make costing ￡30 per hour in labour costs. Once ready for sale each basket is sold to a wholesaler for ￡150 What is the Break Even Point in number of baskets for the business? 45 baskets None of the options. 60 baskets 300 baskets

Question

BakeHealth Itd sells low sugar vegan cake baskets to schools around Hertfordshire. The fixed cost of operating the bakery for a month totals E3,000 Each cake basket requires materials that cost E40 Each cake basket requires 2 hour to make costing ￡30 per hour in labour costs. Once ready for sale each basket is sold to a wholesaler for ￡150 What is the Break Even Point in number of baskets for the business? 45 baskets None of the options. 60 baskets 300 baskets

Answer 1

After the calculations, we get

and

. Substituting the margin per unit in BEP formula, we get Break-even point in units as 60. Therefore, the Break Even Point in the number of baskets for the business is 60 baskets.

Answer 2

## Step 1: Calculate the variable cost. The variable cost is the total cost of materials and labour per unit. Garner the material cost which is £40 per basket and the labour cost for preparing one basket which is £30 * 2 hours = £60.

## Step 2:Subtract your variable costs from the sales price to find the total profit made from each sold basket.

## Step 3: Find the break-even volume by dividing total fixed costs with profit margin per unit.

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