For Callie to make a profit of $5.00, the neighbor needs to sell an additional 7 units of the cake pops.
The additional units can be computed using the concept of break-even point.
Variable cost per unit of cake pops = $1.25
Selling price per unit = $2.00
Contribution margin per unit = $0.75 ($2.00 - $1.25)
Fixed cost = $60.00
Break-even point in units = 80 ($60/$0.75) units
Target profit = $5.00
Sales units with target profit = 87 units ($60 + $5) ÷ $0.75
The additional units required to generate the profit = 7 units (87 - 80)
Thus, additional units of 7 are required to make a profit of $5.00.
Complete Question:
The variable cost of making a unit of cake pops is $1.25. The fixed cost is $60.00. The selling price per unit is $2.00. How many more cake pops does the neighbor need to sell so that Callie can make a profit of $5.00?