CIPS L3M3 Exam - Topic 2 Question 47 Discussion

Actual exam question for CIPS's L3M3 exam

Question #: 47
Topic #: 2

[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?

A50,000

B200,000

C20,000

D2 million

Show Suggested Answer

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 Shala at Apr 10, 2026, 02:24 AM

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Loren

2 days ago

I remember something about calculating contribution margin. If the selling price is $1 and the variable cost is $0.50, the contribution margin is $0.50 per bottle.

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Mi

7 days ago

I think the breakeven point is where total revenue equals total costs, right? So we need to calculate that based on fixed and variable costs.

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