Question

answer the following about break even analysis. New city day care center operates from Monday to friday. it has fixed expenses of $5,000 per week and charges each child who attends the program $15 per day. It costs the center $5 per day for supplies and snacks fro each child. How many children must come ot the center each day for it to break even

Answer 1

Answer:

500 children

Explanation:

Break even point is the level at which a firm makes neither a profit nor a loss. In other words the point where Profit = $ 0.

Break even (units) = Fixed Costs ÷ Contribution per unit

Therefore,

Break even (children) = $5,000  ÷ ($15 - $5)

                                    = 500

500 children must come to the center each day for it to break even.