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Break-Even Analysis for Marie Bain

Grand Isle, Louisiana, is a popular resort, but it regularly faces a shortage of fresh water. Marie Bain has the entrepreneurial spirit and plans to open a business, shipping barges of fresh water to the town. She estimates the fixed cost to be $3,000,000, and the variable cost (water, labor, fuel) to be $50,000 per barge load. Selling price is expected to average $80,000 per barge load.

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Breakeven occurs at 3,000,000/(80,000-50,000)=100 barge loads.

The ...

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I show how to calculate the break-even cost.