Breakeven Point Template - PDF

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```					                                 Math-in-CTE Lesson Plan Template
Lesson Title: Calculating Break-even Point                                                                  Lesson #
Author(s): Dave Prom                              Phone Number(s):           E-mail Address(es):
Lesson Objective:             To calculate break-even price for a business
Supplies Needed:              Power point equipment, calculator, worksheets
TEACHER NOTES
THE "7 ELEMENTS"
1. Introduce the CTE lesson.
Review:                                                                   Answer: When its total sales income equals
its total costs.
What is the definition of break-even point for a business?
Fixed and variable costs
What are the two main types of business costs?
Knowing when to expect profit
Why might it be important for a business to calculate break-even point?
Setting prices
OBJECTIVE: To calculate break-even point for a business.
Relocating
Determining capital needs
Start showing Powerpoint presentation “ Tipping Point”: Slides 5 - 11
Offering incentives

2. Assess students’ math awareness as it relates to the CTE
lesson.
Group Activity on the board:
What is unit cost?
The cost per item (or cost per amount of
weight of volume of an item)

—( MATH-IN-CTE )—
3. Work through the math example embedded in the CTE lesson.
Example: Matthew buys M & M’s at Costco for \$19.20 for a box of 48.        \$19.20/48 = \$.40
What is the unit cost for each package of M & M’s?

If he sells them for \$.60 per package, how much money is he making
\$.60 - \$.40 = \$.20
on each package?
How many packages will he need to sell in order to get his original
investment back?                                                           \$19.20/\$.60 = 32

4. Work through related, contextual math-in-CTE examples.
Power point slides 12 - 15                                                 We can determine total fixed costs by adding
the two fixed costs together.
Break-Even Formula: BP = FC/VCM
\$25 + \$100 = \$125
BP – break-even point
Variable costs per unit are determined by
FC – total fixed costs
dividing the variable costs by the number of
VCM – variable-cost margin (calculated by subtracting variable costs       units \$50/144 = \$.347 or \$.35
per unit from the selling price per unit)                                  Variable-cost margin is calculated by
subtracting the variable cost per unit from the
selling price: \$1.50 - \$.35 = \$1.15.
A hot dog vendor at a local baseball park has the following fixed costs:
Therefore, using the break-even formula,
BP = FC/VCM, we find BP =\$125/\$\$1.15
- \$100 for equipment rental
=108.7
The variable costs are estimated to be \$50 for twelve dozen (or 144)
The vendor must sell 109 hot dogs to break
hot dogs and buns, as well as condiments and paper products.
even and begin making a profit.
The hot dogs will sell for \$1.50 each.
How many hot dogs will the vendor need to sell to break even?

—( MATH-IN-CTE )—
5. Work through traditional math examples.
Unit Cost worksheet
6. Students demonstrate their understanding.
7. Formal assessment.                                         Posttest Questions:
Calculate the variable cost per unit for Videos
to Go, which has total sales revenues of
\$95,200; charges \$4 for two days’ rental; and
has total variable costs of \$31,500.
a. \$3.17                c. \$2.52
b. \$2.10                d. \$1.33

What is the break-even point in units for a
business whose total fixed costs are
\$275,450; selling price per unit is \$16; and
variable cost per unit is \$14.75?
a. 220,360               c. 183,633
b. 150,300               d. 225,120

—( MATH-IN-CTE )—

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