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Break-even Boardwalk

Level 1 of 10 · Use contribution to find break-even, target-profit sales and margin of safety.

The ferris wheel opens

Tickets $10, cup of lemonade for each visitor costs $4, stall rent $180 for the day. Capacity 200 visitors · contribution +$6 a ticket.

Ticket price
$10
Variable cost
$4
Fixed costs
$180
Contribution
+$6

How many tickets are needed to break even?

0

At 0 tickets: contribution $0 − fixed $180 = −$180

Contribution per ticket = price − variable cost per visitor. Break-even tickets = fixed costs ÷ contribution, rounded up. For a target profit, add the target to fixed costs. Margin of safety is measured in tickets. No tax or GST is modelled.