Break-Even Analysis: A Look at Profit and Loss: As an entrepreneur, there are going to be many decisions that you…
Break-Even Analysis: A Look at Profit and Loss: As an entrepreneur, there are going to be many decisions that you need to make, such as the price to charge your customers for your goods and services. You have just graduated from college and recently opened a specialty pizza restaurant. Based on surveys conducted in your area, you determine that it is feasible to sell your specialty pizzas for $15. The cost for making the pizzas includes a fixed cost of $55 and a labor cost of $4 per pizza. •Establish an equation to determine revenue. •Establish an equation to determine total cost. •How many pizzas must be sold to break even (i.e., you experience neither a profit nor a loss)? Interpret your result. As a business owner, it is very important to have an understanding of profit and loss. The formula for determining profit is Profit = revenue – cost (P = R – C). •Determine the profit if 500 specialty pizzas are sold. Interpret your result. •How many specialty pizzas would need to be sold to make a profit of $1,100? Interpret your result. •How many specialty pizzas would you need to sell if you wanted to make a profit greater than $1,595? Interpret your result.
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