Paper 1 · break-even analysis
Mary sells onions at 1 a pocket and her fixed costs are $3 200. Calculate the break-even point in pockets.
Model answer
800
Also accepted: 800 pockets, 800 units
Explanation: Break-even in units is fixed costs divided by contribution per unit. Contribution is 5 less 1, which is 4, so 3 200 divided by 4 gives 800 pockets. At that level the contribution earned exactly covers the fixed costs and the profit is nil.
Derived from ZIMSEC Business Enterprise Skills Paper 1, Nov 2018, Q9