Break-even in dollars and units
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1. You are selling crafts - candles you make at home and sell at art fairs. Your fixed costs are $5,000 per year. Each candle costs $2.00 to make (variable cost) and sells for $10.00. What is your breakeven in dollars and units?
2. You are selling candy bars at a stand at the local event. The fixed costs of building the stand, advertising, etc. amount to $900. You buy the candy bars for $.50 and sell them for $1.25 each. What is your breakeven in dollars and units (round to nearest whole number)?
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Solution Summary
The solution explains the calculation of break-even in dollars and units.
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1. Breakeven is when the operating profit is zero or total revenue = total cost
Or we can write total revenue = total variable cost + total fixed cost
total revenue - total variable cost = total fixed cost
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