The Scenario
A Durban-based bakery is launching a new line of artisanal breads. Fixed costs (rent, equipment, salary) are R45,000/month. Each loaf costs R18 to produce and sells for R42. The owner wants to know how many loaves she needs to sell per month to break even.
The Brief
Calculate the break-even point in units and in revenue. Then explore what happens if the selling price drops by R5 or if fixed costs increase by 20%.
Deliverables
- The break-even calculation: units and revenue, with the formula shown
- A sensitivity table showing break-even at 3 different price points and 3 different fixed cost levels
- A one-paragraph recommendation on pricing strategy based on the analysis
Submission Guidance
Break-even = Fixed Costs / (Price - Variable Cost). But the insight is in the sensitivity — how fragile is this business model?
Submit Your Work
Your submission is graded against the rubric on the right. If you pass, you get a public Badge URL you can share on LinkedIn. There is no draft save, so work offline first and paste your finished response here.