Barb’s Best Pies sells a meat pie for $5.00. Variable costs are $3.00 per unit and fixed costs for the period are $4,000. What is the profit (loss) based on the sales volume at 1,000 pies?

Question

BlackTom AI · Accepted Answer

Contribution margin per unit equals price minus variable cost: $5.00 − $3.00 = $2.00.

1. Relevant knowledge points and concepts
- Contribution margin per unit = Selling price per unit − Variable cost per unit.
- Total contribution = Contribution margin per unit × Quantity sold.
- Profit (or loss) for the period = Total contribution − Fixed costs.
- Break-even quantity = Fixed costs / Contribution margin per unit.

2. Step-by-step reasoning
- Selling price per pie = $5.00.
- Variable cost per pie = $3.00.
- Contribution margin per pie = $5.00 − $3.00 = $2.00.
- Sales volume = 1,000 pies.
- Total contribution = $2.00 × 1,000 = $2,000.
- Fixed costs = $4,000.
- Profit (loss) = Total contribution − Fixed costs = $2,000 − $4,000 = −$2,000.

3. Intermediate calculations (shown)
- Contribution per unit: 5.00 − 3.00 = 2.00
- Total contribution: 2.00 × 1000 = 2,000
- Profit: 2,000 − 4,000 = −2,000

4. Why the correct answer is correct
Because each pie contributes $2 toward covering the fixed costs, 1,000 pies contribute $2,000 total; that is not enough to cover the $4,000 fixed costs, leaving a shortfall of $2,000. A negative result indicates a loss of $2,000.

5. Why other plausible answers would be incorrect
- Ignoring variable costs and computing Revenue − Fixed Costs would give $5,000 − $4,000 = $1,000 (incorrect), because variable costs of $3,000 (1,000 × $3) must be subtracted as part of total costs.
- Claiming break-even or zero profit is wrong because break-even requires 2,000 pies (4,000 / 2), not 1,000.
- Any answer showing a positive profit (e.g., $2,000 profit) misapplies the contribution concept.

6. Conclusion
The computed result is a $2,000 loss, which matches the provided correct answer: $2,000 loss.

Barb’s Best Pies sells a meat pie for $5.00. Variable costs are $3.00 per unit and fixed costs for the period are $4,000. What is the profit (loss) based on the sales volume at 1,000 pies?单项选择题

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