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Break-even Analysis

Suggested Timeframe: 1 hour

Goal

To assist students in becoming more familiar with the method and application of break-even analysis.

Understanding break-even is critical for the long term survival of any business by giving clear metrics for when the business will start making a profit.

Activities

Activity 1 Uses for break-even analysis

Work through the student handout and then clarify how break-even analysis is used by asking students how it would be applied by business people in the following situations.

  1. Planning a start-up
  2. Moving premises
  3. Planning a new product for an existing business

Activity 2 The Window Cleaner

Ask students to work on the questions, which ask them to apply theory to practice. Answers below.

1. 1800 jobs
2. $72,000
3. 1125 hours
4. Print ad
5. 5527 car washes sold
6. $140,845
Last updated 11 November 2016