Subjects business math

Breakeven Price

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Breakeven Price


1. The problem is to find the formula for the breakeven price per carton. 2. Breakeven price is the price at which total revenue equals total cost, so there is no profit or loss. 3. The general formula for breakeven price per unit (carton) is: $$\text{Breakeven Price per Carton} = \frac{\text{Total Fixed Costs} + \text{Total Variable Costs}}{\text{Number of Cartons Sold}}$$ 4. Here, Total Fixed Costs are costs that do not change with the number of cartons produced or sold (e.g., rent, salaries). 5. Total Variable Costs depend on the number of cartons produced (e.g., materials, labor per carton). 6. The formula ensures that the revenue from selling cartons at this price covers all fixed and variable costs exactly. 7. In simpler terms, you add all your costs and divide by how many cartons you expect to sell to find the minimum price per carton to avoid losses. This formula helps businesses set a price that covers costs without making a loss.