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CIPS Exam L3M3 Topic 1 Question 26 Discussion
Actual exam question for
CIPS's
L3M3 exam
Question #: 26
Topic #: 1
[All L3M3 Questions]
Topic #: 1
A bottle of sparkling water sells for $1. The variable cost is 50 cents. Fixed costs for the business are $100,000 (one hundred thousand dollars). How many bottles of water must be sold for the business to reach breakeven point?
Suggested Answer:
B
The 'contribution' (selling price minus variable cost) for each bottle is 50 cents. Divide the fixed costs by the contribution (100,000 / 0.5) = 200,000
If your textbook or tutor has not covered this type of calculation, don't worry; it is a difficult ques-tion and is unlikely to be a significant issue in the CIPS examination.
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