In the break-even example, what price per bushel is used to compute break-even yield?

In the break-even example, what price per bushel is used to compute break-even yield?

• A. $5.25
• B. $5.50
• C. $5.75
• D. $6.00

Answer: (B)

Break-even yield is the amount of production you must sell to cover all costs, so revenue equals total costs. Revenue is the price per bushel times the yield per acre, and the break-even yield comes from dividing total costs per acre by the price used in the revenue calculation. In this example, the budget or scenario uses a price of $5.50 per bushel to estimate revenue, so that price is the one used to compute break-even yield. If the price were higher, you’d need fewer bushels to break even; if lower, more. So the price used is $5.50 per bushel.

Break-even yield is the amount of production you must sell to cover all costs, so revenue equals total costs. Revenue is the price per bushel times the yield per acre, and the break-even yield comes from dividing total costs per acre by the price used in the revenue calculation. In this example, the budget or scenario uses a price of $5.50 per bushel to estimate revenue, so that price is the one used to compute break-even yield. If the price were higher, you’d need fewer bushels to break even; if lower, more. So the price used is $5.50 per bushel.