Break Even Point in Math

An enterprise in the production of certain goods will require a fixed cost (employee wages, building costs, bank credit interest, etc.) and variable costs (costs required in the production process)

In an established business, a company will occur possibly:

• If the opinion received exceeds the total cost (variable cost + fixed cost) incurred, then the business is said to be profitable.
• If the income received is less than the total cost incurred, then the company is said to be a loss.
• If the accepted opinion equals the total cost incurred, then the business is said to be in a condition not to lose. This condition is called Break Even Point.

Example Question of Break Even Point

CV SEJAHTRA produces children's toys for $6,500 per unit. The fixed costs incurred are $17,500,000. If the toy will sell for $10,000/per unit, determine the number of toys that must be sold in order to break even point!

Answer:
B = Variable costs + Fixed costs
B = 6,500x + 17,500,000

Break even point occurs if:
Total cost = Revenue
6,500x + 17,500,000 = 10,000x
6,500x - 6,500x + 17,500,000 = 10,000x - 6,500x
17,500,000 = 3,500x
17,500,000/3,500 = 3,500x/3,500
5,000 = x

So the number of toys that must be sold to occur break even point is 5,000 units.

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Referensi :

• To'Ali's book math group accounting and sales

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