Break Even Word Problems

Front

What is a break-even point?

Back

The break-even point is the level of sales at which total revenues equal total costs, resulting in neither profit nor loss.

Front

How do you calculate profit?

Back

Profit is calculated using the formula: Profit = Income - Cost.

Front

What is the fixed cost in a business?

Back

Fixed costs are expenses that do not change with the level of goods or services produced, such as rent or salaries.

Front

What are variable costs?

Back

Variable costs are expenses that vary directly with the level of production, such as materials and labor.

Front

If a ticket costs $25 and a dessert costs $5, what is the total cost per customer?

Back

The total cost per customer is $30 ($25 for the ticket + $5 for the dessert).

Front

How do you write an equation for total income?

Back

Total income can be expressed as: Income = Price per unit × Number of units sold.

Front

How do you write an equation for total cost?

Back

Total cost can be expressed as: Cost = Fixed Costs + (Variable Cost per unit × Number of units produced).

Front

What is the significance of the break-even point in business?

Back

The break-even point helps businesses understand how many units they need to sell to cover costs and start making a profit.

Front

If a business sells 1,200 tickets at $25 each, what is the total income?

Back

Total income = 1,200 tickets × $25 = $30,000.

Front

If a business has fixed costs of $18,500 and sells 925 tickets at $25 each, when does it break even?

Back

The business breaks even when it sells 925 tickets.