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In Business / High School | 2025-07-08

Grand Isle, Louisiana, is a popular resort but regularly faces a shortage of fresh water. Marie Bain has the entrepreneurial spirit and plans to open a business shipping barges of fresh water to the town. They estimate their fixed cost to be $3,000,000, and their variable cost (water, labor, fuel) to be $50,000 per barge load. Selling price is expected to average $80,000 per barge load. Her break-even point is: (A) 900 barge loads (B) 600 barge loads (C) 200 barge loads (D) 100 barge loads (E) 1200 barge loads

Asked by maddygabbard6886

Answer (1)

To determine Marie Bain's break-even point for her fresh water delivery business, we need to calculate the number of barge loads that will cover both the fixed and variable costs.
The break-even point in business is the point at which total revenue equals total costs, resulting in neither profit nor loss.
Step-by-step Solution:

Identify Fixed and Variable Costs:

Fixed Costs (FC): $3,000,000
Variable Cost per barge load (VC): $50,000
Selling Price per barge load (SP): $80,000


Break-even Formula: The formula for calculating the break-even point in units (in this case, barge loads) is given by: Break-even point (units) = Selling Price per unit − Variable Cost per unit Fixed Costs ​

Insert the values into the formula: Break-even point = 80 , 000 − 50 , 000 3 , 000 , 000 ​ Break-even point = 30 , 000 3 , 000 , 000 ​

Calculate: Break-even point = 100


Therefore, Marie Bain needs to ship 100 barge loads to reach her break-even point.
Multiple-choice Answer: (D) 100 barge loads

Answered by SophiaElizab | 2025-07-21

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