Question

based on the diagram, has petes business broken even (meaning, covered its fixed expenses and become profitable)?

Explanation:

Step1: Calculate total sales

Total sales = Selling price per unit × Number of units sold = \( 11\times100 = 1100\)

Step2: Calculate contribution margin

Contribution margin = Total sales - Total variable expenses = \(1100 - 120 = 980\)

Step3: Analyze profit situation

Pre - tax profit is \(625\), which means after covering fixed operating expenses (\(800\) is incorrect assumption, but from the data, since there is a pre - tax profit, it means fixed expenses are covered. And net profit is \(621.25\) (calculated as \(625\times(1 - 15\%)\)).

Answer:

Yes