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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]

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?

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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.


by Kris at Nov 14, 2024, 06:58 AM

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Ryan
4 days ago
Hmm, let me break out my calculator and do the math... Yep, B) 200,000 is the right answer. This is a piece of cake compared to the real world, where the breakeven point is just 'when the boss stops yelling at you'.
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Chanel
8 days ago
I bet the guy who wrote this question was really thirsty when he came up with it. The correct answer is clearly B) 200,000.
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Carey
20 days ago
D) 2 million? That's gotta be a joke. Who would need to sell that many bottles of water to break even? I'm going with A) 50,000.
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Adelina
9 days ago
A) 50,000
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Gerry
21 days ago
I'm not sure about the math, but I think C) 20,000 makes sense. It seems like the most reasonable option.
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Keshia
23 days ago
I agree with Frederica. The fixed costs are $100,000, so if the variable cost is 50 cents per bottle, we need to sell 20,000 bottles to break even.
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Latonia
28 days ago
No way, the answer is C) 20,000. That's easy, just divide the fixed costs by the contribution margin per bottle.
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Noel
3 days ago
A: Exactly, it's a simple calculation to determine the breakeven point.
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Dorcas
4 days ago
B: So, that means the business needs to sell 20,000 bottles of water to reach the breakeven point.
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Jose
13 days ago
A: The answer is C) 20,000. You're right, just divide the fixed costs by the contribution margin per bottle.
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Frederica
1 months ago
I think the answer is C) 20,000.
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Mozell
1 months ago
I think the correct answer is B) 200,000. The fixed costs are $100,000 and the variable cost per bottle is $0.50, so we need to sell enough bottles to cover the fixed costs.
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Novella
3 days ago
D) 2 million
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Casie
8 days ago
B) 200,000
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Lizette
9 days ago
C) 20,000
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Reynalda
15 days ago
A) 50,000
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Rashad
19 days ago
Exactly, we just need to cover the fixed costs with the sales.
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Kristin
24 days ago
That makes sense. So we need to sell 200,000 bottles to break even.
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Pearly
29 days ago
I think so, because the fixed costs are $100,000 and the variable cost per bottle is $0.50.
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Sol
1 months ago
Are you sure it's 200,000 bottles?
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