calculate break-even output

What is break‑even? It’s the point where a business’s total revenue equals its total costs, so it makes neither profit nor loss. Think of it as the finish line of a race – the moment you stop losing money and start staying even. 🚀

Imagine you’re selling lemonade. You have to pay for lemons, sugar, cups (fixed costs) and you use water and sugar for each cup (variable costs). The break‑even point tells you how many cups you must sell to cover all those costs.

Suppose:

• Fixed costs (FC) = £200
• Selling price per unit (P) = £5
• Variable cost per unit (VC) = £2

Plug into the formula:
$BE = \frac{200}{5 - 2} = \frac{200}{3} \approx 66.67$

Since you can’t sell 0.67 of a unit, you need to sell 67 units to break even. 🎯

1. Read the question carefully – identify which costs are fixed and which are variable.
2. Show the formula clearly and label each variable.
3. Check units – you must round up to the next whole unit.
4. Explain the meaning of the break‑even point in business terms.
5. Use an example or diagram if the question allows extra marks.