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

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

• A. $180
• B. $220
• C. $260
• D. $300

Answer: (B)

Total cost per acre is found by adding fixed costs allocated to each acre to the variable costs for that acre. In break-even analysis, you want the revenue per acre to match this total cost per acre. You get fixed cost per acre by dividing the total fixed costs by the number of acres. Then you add the variable cost per acre. For example, if fixed costs total $1,000 and there are 5 acres, fixed cost per acre is $200. If the variable cost per acre is $20, the total cost per acre is $220. This per-acre total is what you compare to revenue per acre to determine break-even.

Total cost per acre is found by adding fixed costs allocated to each acre to the variable costs for that acre. In break-even analysis, you want the revenue per acre to match this total cost per acre.

You get fixed cost per acre by dividing the total fixed costs by the number of acres. Then you add the variable cost per acre. For example, if fixed costs total $1,000 and there are 5 acres, fixed cost per acre is $200. If the variable cost per acre is $20, the total cost per acre is $220. This per-acre total is what you compare to revenue per acre to determine break-even.