Plenty of people are rejected due to this breakeven question type. This is super easy with this structure ^^
STRUCTURE RULES
Structure the breakeven equation first. Define the breakeven metric. Calculate each component by translating the prompt. Do mental math shortcut and math priority
Breakeven structure
At breakeven,
Profit = 0
Revenu – cost = 0
Revenu structure
Revenue = Freight rate per ton*km x #km x #ton/train
Revenue = 0.07 x #km x 1000
= 70 x #km
Cost structure
Cost = Lease cost + Labor cost + Variable cost
- Lease cost = 200K per year
- Labor cost = #personnel x average wage per month x #month
= 6.25K x 4 x 12
= 25K x 12 (mental math priority)
=25K x 4 x 3 (mental math shortcut)
=300K per year
- Variable cost = operating cost per km x #km = 20 x #km
Cost = 200K + 300K + 20 x #km
= 500K + 20 x #km
Breakeven resolution in km per year
Revenu - Cost = 0
70 x #km - 500K + 20 x #km = 0
(70-20) x #km = 500K
#km = 500K / 50
#km = 10 K per year
Breakeven resolution in km x tons per year
To break even the train need to achieve 10K km
Each train pull 1 000 tons
To break even the train need to achieve 10K km * 1 000 tons = 10K*1K = 10M km x tons
Answer (b)
STRUCTURE FORMULAS
At breakeven, Profit = 0.
25 is a mental math priority
12 has as mental math shortcut 2 x 6 and 3 x 4
Upvote if it is useful ;)
(edited)