20. Break-Even Analysis The Audubon Society at Enormous State University (ESU) i

Question

20. Break-Even Analysis The Audubon Society at Enormous State University (ESU) is planning its annual fund-raising "Eat-a-thon." The society will charge students 50¢ per serv ing of pasta. The only expenses the society will incur are the cost of the pasta, estimated at 15¢ per serving, and the $350 cost of renting the facility for the evening. a. Write down the associated cost, revenue, and profit functions. sell to break even? servings of pasta? b. How many servings of pasta must the Audubon Society c. What profit (or loss) results from the sale of 1,500

Explanation / Answer

a)

Let the number of servings sold be x

Associated cost = Fixed cost + variable cost = 350 + x * 15/100 = 350 + 0.15x

Revenue = 0.50x

Profit = Revenue - Associated cost = 0.50x - (350+0.15x) = 0.35x - 350

b)

For the break even point, the profit must be equal to zero which gives

0.35x - 350 = 0

x = 350/0.35 = 1000

Hence number of servings must be 1000 for the break even point

c)

Profit = 0.35(1500) - 350 = 175$

Related Questions

Navigate

• Browse (All)
• Browse 2
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.