Break-Even Analysis: K6: Worksheet 1

K6: Worksheet 1: Break-even Analysis
In order for a business to do well they need to be in control of their income and their
expenses.
Income – Expenses = Profit
The goal of a business is to make maximum profit. If the income is more than the
expenses, the business makes a PROFIT. If the income is LESS than the EXPENSES, the
business runs at a LOSS. If the income is EXACTLY THE SAME as the expenses, the
business BREAKS EVEN.
Income
Expenses
Whenever two graphs cross each other, it is showing a break-even point. It is the point
where they simply cover all their expenses. Where there is a loss, the expenses curve is
above the income curve and it means that the income is less than the expenses.
Where the income graph is above the expenses, the area represents where the business is
making a profit.
Break-even point
(a) Worksheet 25: Break-even Analyses
(a) A printing company drew the following table to determine the costs to print
brochures. The company pays R10 to print only one pamphlet. The selling
price is R20 each. The overhead costs is R1 000 per month.
Complete the table by calculating A and B
Number of
0 50 100 150 200
pamphlets
Overhead
1 000 1 000 1 000 1 000 1 000
costs
Printing
0 500 1 000 1 500 2 000
costs
Total cost
1 000 1 500 A 2 500 3 000
Income
0 1 000 2 000 B 4 000
i. Make use of this table to draw a line graph that represents the costs and the
income of the company: (Remember your labels). Draw it on the left-hand side!
ii. How many pamphlets must the company sell to break even? _________________
iii. What is the profit when it sells 200 pamphlets? ____________________________
iv. Write a formula to determine the income. ________________________________
v. Write a formula to determine the total cost. _______________________________
vi. Solve the break-even point algebraically. (Not for CAPS)
__________________________________________________________________
(b) Pieter’s dad wants to encourage him to learn harder for his matric exam.
OPTION A
To motivate him, his dad offers him R500,00 if he studies 3 hours every
afternoon.
For every distinction that he achieved, he will receive R250,00
Option A= 500 + 250 (number of distinctions)

OR
OPTION B
His dad offers him R1 000,00 if he studies 3 hours every afternoon.
For every distinction that he achieved, he will receive R100,00
Option B= 1 000 + 100 (number of distinctions)
Complete the table: OPTION A

Amount of 0 1 2 3 4 5 6 7
distinctions
Amount in R
Complete the table: OPTION B

Amount of 0 1 2 3 4 5 6 7
distinctions
Amount in R
i. Draw the graphs on the same pair of axis.

ii. Add a Y on your graph for the break-even point and explain it in your own words.
iii. If Pieter achieved 5 distinctions, which option will be the better one? Do the
calculations and read the answers from you graph. (Show the reading from your
graph)
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
iv. Pieter’s goal is to earn R2 000. Read the number of the distinctions that he must
achieve from your graph.
__________________________________________________________________
v. Do you think it’s the best way to motivate a child? Discuss
__________________________________________________________________
(c) Ms Coetzee bought a small franchise that sells CD’s at the local flea market on
weekends. The franchise costs her R1 250 per month up front and she also pays
R200 per weekend in order to trade at the flea market. Each CD costs R75 and
her plan is to sell them for R175,00 each. Assume that the month in which she
is trading has 4 Sundays.
i. Write the formulas that she can use to:

Calculate her income in the form:
MONTHLY INCOME = _________________________________________
Calculate her expenses in the form:
MONTHLY EXPENSES = _______________________________________
ii. Complete the following table:

Nr of CD’s 0 5 10 15 20 25 30
Monthly
income
Monthly
expenses
iii. Use the next page to draw on the same set of axes a line graph representing
Ms Coetzee’s monthly income and another line graph representing her
monthly expenses.
iv. Determine Ms Coetzee’s profit or loss if she sold 25 CD’s in this particular
v. Determine the minimum number of CD’s that Ms Coetzee must sell in order
to make a profit.
vi. How many CD’s must she sell to break-even?
vii. Show the area where there is a loss, where the expenses curve is above the
income curve.
viii. Show on the graph, where the income is above the expenses, the area where
the business is making a profit.

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K6: Worksheet 1: Break-even Analysis

Income – Expenses = Profit

iii. What is the profit when it sells 200 pamphlets? ____________________________

iv. Write a formula to determine the income. ________________________________

v. Write a formula to determine the total cost. _______________________________

vi. Solve the break-even point algebraically. (Not for CAPS)

Option A= 500 + 250 (number of distinctions)

Option B= 1 000 + 100 (number of distinctions)

Complete the table: OPTION A

Complete the table: OPTION B

i. Draw the graphs on the same pair of axis.

v. Do you think it’s the best way to motivate a child? Discuss

i. Write the formulas that she can use to:

MONTHLY INCOME = _________________________________________

Calculate her expenses in the form:

MONTHLY EXPENSES = _______________________________________

ii. Complete the following table:

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