Republic of the Philippines

Department of Education
N a t i o n a l Ca pi t a l Re g i o n
Sc h o o l s D i v i s i o n O f f i c e o f La s Pi ñ a s Ci t y

NAME: ___________________________________________ Score: ___________________

GRADE & SECTION __________________________ Teacher: ___________________

BUSINESS MATH 11
First Quarter
Week 8
MOST ESSENTIAL LEARNING COMPETENCY
Determine the break-even point. (ABM_BM11BS-Ij-8)
Solve problems involving buying and selling products. (ABM_BM11BS-Ij-9)

OBJECTIVES
 Define Mark-on, Markdown, and Mark up
 Illustrate Mark-on, Markdown, and Mark up

WHAT I KNOW
Find the solution set (SS) of the following systems of equations.

1. x+y=4 2. x+y=4 3. 2x + y = 5
x-y=2 3x = 12 x - 3y = 6

4. x = 4y - 12 5. 2y = 6
2x + y = 0 3x + 4y = 3

WHAT’S IN
A very important concept in profit and loss is break-even analysis. The cost necessary to keep the
business running regardless of the sales volume is called the fixed cost. The revenue is the product of the price
and the quantity sold. The revenue R is given by R = p • x where p is the price and x is the number of units. At
break-even, the total cost TC is compared with the total revenue R to determine the level of production at which
TC = R. The point at which the business will neither earn a profit nor experience loss is known as break-even
point (BEP).

WHAT’S NEW
Example 1: A store owner sells 1 whole pad paper at P10 per pad. His fixed cost is P5,000, and the variable cost
is P5 per pad.
a. At what level of production will the business owner have a profit of P2,000? A loss of P1,000?
b. How many pad papers will he break-even?
c. Find the break-even point.
Solution:
a. P = R - TC = 10x - (5,000 + 5x) = 5x - 5,000 ; P = 2,000
2,000 = 5x - 5,000 → x = 1,400
To obtain a loss of 1,000, we set P = -1,000 and solve for x
-1,000 = 5x - 5,000 → 4,000 = 5x → 800 = x
b. P = 5x - 5,000 = 0
x = 1,000 pad papers
c. When x = 1,000
R = 10(1,000) = 10,000
Hence, the break-even point is (1,000, 10,000)

WHAT’S IS IT
Example 2: Suppose that the total cost (in pesos) of a business is TC = 30 + 2x, and the unit price (in pesos) of a
certain commodity is p = 15 - x.
a. Write the revenue function.
b. Write the profit function.
c. Find the break-even point.
d. How many units are needed to earn a profit of P10?
Solution:
a. R = px = (15 - x)x = 15x - x2
b. P = R - TC = (15x - x2) - (30 + 2x) = -x2 + 13x - 30
c. 15x - x2 = 30 + 2x → 0 = x2 + 2x - 51x + 30 → 0 = x2 - 13x + 30
x = 3 or x = 10 break-even points: (3, 36) ; (10, 50)
d. P = 10 = -x2 + 13x - 30 → 0 = -x2 + 13x + 30 → 0 = x2 - 13x + 40
 x=5 or x=8
WHAT’S MORE
Example 3: Jaycris is planning to run a coffee shop where he plans to sell each cup of coffee at P50. He
assumed that he fixed cost he needs to pay on a monthly basis amounts to P40,000 which includes all his
expenses like the amount he needs to pay for the rent, wages for his employees, his basic expenses (electricity
bill, water bill, phone bill and internet bill) and etc. So, even if Jaycris has no sales, he is still obliged to pay this
amount.
If a cup of coffee costs Jaycris P10 for the bulk of grind coffee beans, purified water and coffee filters.
a. Set up the cost function.
b. Set up the revenue function.
c. What is the break-even quantity?
d. How many cups must be sold to earn a profit of P40,000?
Solution:
a. FC = 40,000 → fixed cost VC = 10x → variable cost
TC = FC + VC → TC = 40,000 + 10x → cost function
b. R = px = 50x → revenue function
c. break-even quantity, TC = R
50x = 40,000
40x = 40,000
x = 1,000 → break-even quantity (1,000 , 5,000) → break-even point
Note: the break-even quantity is 1,000 cups of coffee. This implies that 1,000 cups of coffee
must be sold each month so that Jaycris will not incur profit or loss.
d. To earn a profit of P40,000
40x - 40,000 = 40,000
x = 2,000
Note: to earn a profit of P40,000, Jaycris must sell 2,000 cups of coffee in a month

WHAT I HAVE LEARNED

The cost necessary to keep the business running regardless of the sales volume is called the fixed cost.
The revenue is the product of the price and the quantity sold. The revenue R is given by R = p • x where p is the
price and x is the number of units. At break-even, the total cost TC is compared with the total revenue R to
determine the level of production at which TC = R. The point at which the business will neither earn a profit nor
experience loss is known as break-even point (BEP).

WHAT I CAN DO
Directions: Solve the problems below.
1. A company that manufacture t-shirts arrived with the following functions:
R(x) = 75x - 3x and C(x) = 125 + 16x, where x is in hundreds of t-shirts
a. Sketch the graph of R(x)
b. Sketch the graph of C(x)
c. Find the break even points
d. For what outputs will a loss occur?
2. The finance department of XYZ Battery modeled that the company’s cost function is given by
C(x) = 156 + 19.7x, where C(x) is the cost in thousand pesos for manufacturing and selling thousands of batteries.
The department arrived at the price-demand function given by p(x) = 94.8 - 5x, where p(x) is the price of each
battery if x thousands of batteries are demanded, 0 ≤ x ≤ 18.
a. How much is the price if 9,480 batteries were sold?
b. Set up the revenue function.
c. Using the revenue function and cost function, set up the equation for the profit function.
d. Find the break-even points.
e. Will the company experience loss if 12,000 batteries were sold? Justify.

ASSESSMENT
Directions: Solve the problem below.
Lopez and Associates sells its product at P16 per kilo. It has been recorded that the company’s variable cost is
P6 per kilo and the fixed cost is P2,000.
a. Set up the total revenue function.
b. Set up the total cost function.
c. Set up the profit function.
d. How much is the profit if 800 kilos of its products were sold.
e. Determine the break-even point(s).
f. How many kilos of the product is needed to recover the fixed cost?

ADDITIONAL ACTIVITY
Do what is asked:
Find the break-even point in units and in peso given that the unit price of a certain commodity is P15.00;
variable cost , P5.00 and total fixed cost of P12.00.

Prepared by: Mary Ann E. Bermas, Las Pinas City National Senior High School – Doña Josefa Campus