A soybean producer expects to receive $5.50 per bushel, fixed costs $60 per acre, and variable costs $160 per acre. What is the expected break-even yield (bushels per acre)?

A soybean producer expects to receive $5.50 per bushel, fixed costs $60 per acre, and variable costs $160 per acre. What is the expected break-even yield (bushels per acre)?

• A. 36 bushels per acre
• B. 40 bushels per acre
• C. 44 bushels per acre
• D. 48 bushels per acre

Answer: (B)

Break-even yield is where revenue covers all costs. Add up costs per acre: fixed plus variable equals 60 + 160 = 220 dollars. Revenue per acre is price times yield, so to break even you need 5.50 times yield to equal 220. Solve for yield: yield = 220 / 5.50 = 40 bushels per acre. At this yield, revenue matches costs (5.50 × 40 = 220), so profit is zero. If you produce more than 40 bushels, revenue exceeds costs and you earn a profit; if you produce less, you incur a loss. For example, 36 bushels would yield 198 in revenue (less than costs), while 44 bushels would yield 242 (a profit of 22).

Break-even yield is where revenue covers all costs. Add up costs per acre: fixed plus variable equals 60 + 160 = 220 dollars. Revenue per acre is price times yield, so to break even you need 5.50 times yield to equal 220. Solve for yield: yield = 220 / 5.50 = 40 bushels per acre. At this yield, revenue matches costs (5.50 × 40 = 220), so profit is zero. If you produce more than 40 bushels, revenue exceeds costs and you earn a profit; if you produce less, you incur a loss. For example, 36 bushels would yield 198 in revenue (less than costs), while 44 bushels would yield 242 (a profit of 22).