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Using Algebra in Business Breakeven Analysis

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I recently opened a specialty pizza business. I can sell my specialty pizzas for \$15. The cost for making the pizzas includes a fixed cost of \$55. And a labor cost of \$4.00 per pizza.
1. Create an equation to determine revenue.
2. Create an equation to determine total cost.
3. How many pizzas must be sold to break even (i.e., you experience neither a profit nor a loss)? Interpret your result.
If the formula for profit is (P = R - C),
4. Determine the profit if 500 specialty pizzas is are sold. Interpret your result
5. How many specialty pizzas would need to be sold to make a profit of \$1100.00? Interpret your result.
6. How many specialty pizzas would you need to sell if you wanted to make a profit greater than \$1,595? Interpret your result.
7. Create slope-line graph, Interpret your results.

Solution Preview

1. Total Revenue (TR) = Price (P) * Quantity (Q)
TR = 15Q

2. Total Cost (TC) = Total Fixed Cost (TFC) + Total Variable Cost (TVC)
TC = 55 + 4Q

3. Let TR = TC
15Q = ...

Solution Summary

This solution uses algebra to find a pizza business' breakeven price and shows the results graphically.

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