Break-even Analysis
Suggested Timeframe: 1 hour
Goal
To assist students in becoming more familiar with the method and application of break-even analysis.
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.
- Planning a start-up
- Moving premises
- 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 |
Resources
- How much money do you need when starting a business? (for an article about assessing the set-up costs for a new business, including the use of break-even analysis)
- Templates and Calculators (for the Business.govt.nz break-even calculator)
