Discussion
The breakeven point of a processing plant is the output at which
Answer: A
Correct answer: Total revenue equals total cost
At breakeven the plant makes neither profit nor loss:
\[ Q_{BE} = \frac{\text{Fixed cost}}{\text{Price} - \text{Variable cost per unit}} \]The denominator is the contribution per tonne - what each tonne contributes towards the fixed costs once its own variable cost has been met.
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