Math-in-CTE Lesson Plan Template · Math-in-CTE Lesson Plan Template Lesson Title: ... $1.33 What is the break-even point in units for a business whose total fixed costs are $275,450;

—( MATH-IN-CTE )—

Math-in-CTE Lesson Plan Template

Lesson Title: Calculating Break-even Point Lesson #

Author(s): Dave Prom Phone Number(s): E-mail Address(es): Lynnda Prom [email protected]

Lesson Objective: To calculate break-even price for a business Supplies Needed: Power point equipment, calculator, worksheets

THE "7 ELEMENTS" TEACHER NOTES (and answer key)

1. Introduce the CTE lesson. Review:

What is the definition of break-even point for a business?

What are the two main types of business costs?

Why might it be important for a business to calculate break-even point?

OBJECTIVE: To calculate break-even point for a business.

Start showing Powerpoint presentation “ Tipping Point”: Slides 5 - 11

Answer: When its total sales income equals its total costs.

Fixed and variable costs

Knowing when to expect profit

Setting prices

Relocating

Determining capital needs

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)


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. 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 on each package?

How many packages will he need to sell in order to get his original investment back?

$19.20/48 = $.40

$.60 - $.40 = $.20

$19.20/$.60 = 32

4. Work through related, contextual math-in-CTE examples. Power point slides 12 - 15

Break-Even Formula: BP = FC/VCM

BP – break-even point

FC – total fixed costs

VCM – variable-cost margin (calculated by subtracting variable costs per unit from the selling price per unit)

A hot dog vendor at a local baseball park has the following fixed costs:

- $25 license

- $100 for equipment rental

The variable costs are estimated to be $50 for twelve dozen (or 144) hot dogs and buns, as well as condiments and paper products.

The hot dogs will sell for $1.50 each.

How many hot dogs will the vendor need to sell to break even?

We can determine total fixed costs by adding the two fixed costs together.

$25 + $100 = $125

Variable costs per unit are determined by dividing the variable costs by the number of units $50/144 = $.347 or $.35

Variable-cost margin is calculated by subtracting the variable cost per unit from the selling price: $1.50 - $.35 = $1.15.

Therefore, using the break-even formula,

BP = FC/VCM, we find BP =$125/$$1.15 =108.7

The vendor must sell 109 hot dogs to break even and begin making a profit.


5. Work through traditional math examples. Unit Cost worksheet

6. Students demonstrate their understanding. Complete “Give Me a Break” and “Skate Around” worksheets

Review answers

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

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Math-in-CTE Lesson Plan Template · Math-in-CTE Lesson Plan Template Lesson Title: ... $1.33 What is the break-even point in units for a business whose total fixed costs are $275,450;