How do you calculate breakeven?

To calculate breakeven, the focus is on understanding when total revenues equal total costs, meaning there is neither profit nor loss. The correct approach involves identifying the point at which total income or revenue just covers total costs, including both fixed and variable components.

The rationale behind the correct calculation is rooted in the concept of determining how much total income is needed to cover all expenses. By subtracting operating profit from total income, one arrives at the necessary amount of revenue needed to cover fixed and variable costs. This ultimately provides insight into how much revenue is required for the business to reach a point of no profit or loss.

In other options, the methods described do not align with the traditional breakeven calculation. For instance, adding operating profit to total income indicates generating profits beyond breakeven, while dividing total income by expenses does not reflect the relationship between revenue and costs in the way that's required for breakeven analysis. Lastly, subtracting fixed costs from total revenue is not a complete representation of breakeven as it ignores variable costs that also contribute to total expenses. Thus, the focus on operating profit in the correct method highlights the balance between income and total costs needed to achieve breakeven.