In Business or Economics the **Break Even Point (BEP)** is the point at which the total of fixed and variable costs of a business becomes equal to its total revenue. At this point, a business neither earns any profit nor suffers any loss. The following graph explains all the concepts used to find out the break even point:

#### Scenario

Let’s consider an online Bakery that specialises in selling Birthday Cakes online. The owner of the bakery has estimated all the costs involved and grouped them into two categories:

**Fixed Costs:**These costs will remain the same and do not vary depending on the number of cakes being sold. They include:- The rent,
- Purchasing Cooking Equipment,
- Utility Bills,
- Website (Setup and maintenance/hosting).

**Variable Costs:**These costs will vary depending on the number of cakes being sold. They include:- Ingredients,
- Packaging,
- Delivery Fees.

The total costs of this online bakery consist of the fixed costs plus the variable costs and can be calculated using the following formula:

The revenues of this online bakery consist of the money received when selling cakes. They can be calculated using the following formula:

The question we are trying to answer is as follows:

**What is the break even point of this online bakery? In other words, how many cakes will need to be sold to cover all the costs and start making a profit?**We can answer this question using the following formula:

#### Coding Challenge

We have listed all the costs of our online bakery, both fixed and variable into a text file.

The average price per cake is £16.00.

Use a Python program to extract the relevant information from the text file in order to:

- Calculate the sum of all fixed costs.
- Calculate the sum of all variable costs.
- Find out the break even point for this business: how many cakes will need to be sold to cover all the costs and start making a profit?

The text file we will use contains one line per cost as follows:

*Description;Type of cost (fixed cost or variable cost);Value (in pounds);*

costs.txt

To complete this challenge you will need to read more about how to read through a CSV file.

#### Solution...

The solution for this challenge is available to full members!Find out how to become a member:

➤ Members' Area