1. Breakeven Analysis
Unit 2.6

2. OBJECTIVES 2-6 BREAKEVEN ANALYSIS
Banking
12/3/2018
2-6 BREAKEVEN ANALYSIS
OBJECTIVES
Determine the breakeven prices and amounts using technology or algebra.
Chapter 1

3. Key Terms
zero net difference
quadratic formula

4. What happens when revenue equals expense?
Why wouldn’t a company set the price of an item at the breakeven point price?
Are there always two breakeven points?
Could there be a situation where there are more than two?
Less than two?
Describe situations where a graph might also be a quadratic.
What are you finding when you solve a quadratic equation?

6. Example 1
Determine the prices at the breakeven points for the Picasso Paints product in Lesson 2-5. The expense function is E = – 3,500p + 238,000, and the revenue function is R = –500p2 + 30,000p.

7. CHECK YOUR UNDERSTANDING
The expense function for a particular product is E = –2,000p ,000. The revenue function for that product is R = –600p2 + 18,000p. Determine the prices at the breakeven points for this product both algebraically and graphically.

8. EXTEND YOUR UNDERSTANDING
Knowing that the two breakeven prices have been rounded to the nearest cent, what would you expect when each is substituted into the expense and revenue equations?

9. Example 2
Determine the revenue and expense for the Picasso Paints product at the breakeven points found in Example 1.

10. CHECK YOUR UNDERSTANDING
How could you have improved on the error when calculating the expense and revenue values?

11. EXAMPLE 3
Use a spreadsheet to determine the breakeven price for the Picasso product.

12. CHECK YOUR UNDERSTANDING
What cell formulas were used to identify the a, b, and c values shown in B11, B12, and B13?