In the break-even example, what is the total revenue per acre at break-even?

In the break-even example, what is the total revenue per acre at break-even?

• A. $180
• B. $200
• C. $220
• D. $240

Answer: (C)

The thing being tested is what it means to break even: total revenue per acre must match total costs per acre so there’s no profit or loss. In this example, the total cost per acre is $220, so the revenue you’d need to cover those costs exactly is also $220 per acre. If revenue per acre were $180 or $200, revenues wouldn’t cover all costs and you’d incur a loss. If revenue per acre were $240, revenues would exceed costs and you’d have a profit. So $220 per acre is the amount that yields zero profit, i.e., break-even.

The thing being tested is what it means to break even: total revenue per acre must match total costs per acre so there’s no profit or loss. In this example, the total cost per acre is $220, so the revenue you’d need to cover those costs exactly is also $220 per acre. If revenue per acre were $180 or $200, revenues wouldn’t cover all costs and you’d incur a loss. If revenue per acre were $240, revenues would exceed costs and you’d have a profit. So $220 per acre is the amount that yields zero profit, i.e., break-even.