Costs and Profits

Unit: Young Entrepreneurs - Business Basics

Lesson 2 of 5: Understanding Costs and Profits

Duration: 110 minutes
Class size: 10 students
Year Levels: Years 1, 2 & 3 (Differentiated activities)
Learning Area: Humanities and Social Sciences (HASS) - Economics and Business & Mathematics (Measurement and Number)
Curriculum: NSW Curriculum Framework

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Lesson Overview

In this lesson, students explore the basic financial concepts of costs and profits within a small business context. They will calculate materials needed for their product, estimate costs, and potential profits. The lesson is carefully differentiated to cater to Years 1, 2, and 3 learners to ensure all students engage meaningfully according to their developmental levels. Activities are highly hands-on, linking with mathematics to reinforce measurement, addition, and subtraction skills through real-world business examples.

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WALT (We Are Learning To)

• Year 1: Understand what costs and profits mean for a simple business. Calculate materials required using basic counting and addition.
• Year 2: Estimate costs using addition and subtraction, understand profit as money left after costs.
• Year 3: Calculate costs and profits using addition, subtraction and simple multiplication; make predictions about potential earnings.

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NSW Curriculum Links

Humanities and Social Sciences (Economics and Business) Stage 1:

• Skills and Knowledge:
  • Recognise the purpose of business activities (selling, buying, making money)
  • Explore how resources are used to produce goods
  • Understand basic financial literacy concepts: cost, profit, money management
    (Adapted for early stage learners in Years 1–3)

Mathematics Stage 1 and 2:

• Use direct comparisons to measure and estimate mass and capacity (Year 1)
• Develop strategies for counting and calculating with small numbers; add and subtract (Years 1–3)
• Solve simple problems involving addition, subtraction and multiplication in authentic contexts
• Relate mathematical ideas to real-world contexts (e.g., costing and pricing)

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Success Criteria

Students will be able to:

• Define basic business terms "cost" and "profit".
• Calculate the amount of materials needed to produce their product.
• Estimate the cost of materials and predict potential profits.
• Work collaboratively to create and present their simple business calculations.

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Resources Needed

• Pre-prepared shopping lists and price tags
• Materials sheets for product making (paper, cardboard, craft supplies)
• Worksheets with tables for costs and profits (differentiated by year)
• Calculators (for Years 2 and 3)
• Whiteboard or PowerPoint for modelling key concepts
• Money manipulatives (toy coins and notes)
• Simple profit chart templates

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Lesson Breakdown

Time	Activity	Details	Differentiation & Notes
0–10 min	Introduction & Engage

• Recap last lesson: What is a business? Why do people sell things?
• Introduce new terms: Cost (what we pay for supplies) and Profit (what is left after costs). Use visuals and simple examples (e.g., selling lemonade).
  | Whole group; use a storybook or puppet to demonstrate; encourage students to share what they know about money. | | 10–25 min | Group Discussion & Examples |
• Teacher models a simple product (e.g., friendship bracelet, paper bookmark).
• Identify materials needed with the class. List items on the board, assign prices to each (e.g., 1 ribbon $2).
• Discuss how much money is spent (cost) and how much you could sell it for.
  | Years 1: Count materials, simple addition to find total cost.
  Years 2: Add and subtract costs and prices.
  Years 3: Calculate profits (selling price - cost). Use calculators if needed. | | 25–50 min | Hands-On Activity: Design and Calculate |
• In small groups (year levels mixed), students plan their own simple product (e.g., a card, simple stationery item).
• Each student chooses materials and records quantities needed.
• Calculate the total cost of materials.
• Estimate selling price and calculate possible profit.
  | Provide templates differentiated by year:
  Year 1 – Counting and simple total costs.
  Year 2 – Writing addition/subtraction equations.
  Year 3 – Multiplication and profit prediction.
  Assist with scaffolding and provide word banks. | | 50–60 min | Snack Break / Movement Break |
• Refresh and reset. | | 60–80 min | Create Product Prototype |
• Use craft supplies to make their planned product (e.g., design their card or bookmark). | Hands-on creation; allows tactile and creative engagement, reinforcing decision making about resources. | | 80–95 min | Presentations and Sharing |
• Students explain their product, costs, selling price, and estimated profit.
• Discuss as a class common challenges or surprises. | Encourage respectful listening and simple feedback. Use sentence starters for younger students. | | 95–105 min | Extension / Challenge Activities |
• Advanced learners (Year 3): Create a “What if” scenario – What happens if the cost or price changes? Calculate new profits.
• Year 1 and 2: Play a simple buying and selling role play game with toy money. | Support extended thinking and real-world application. | | 105–110 min | Review and Reflect |
• Revisit WALT and success criteria.
• Quick quiz or verbal questions on costs and profits.
• Introduce simple home connection activity: ask students to talk about a product at home and what they think it costs or sells for. | Consolidate and prepare for next lesson. |

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Differentiation Strategies

• Visual supports for key vocabulary and concepts (pictures, word walls).
• Small group targeted support during calculation tasks.
• Manipulatives and concrete materials to ground abstract concepts.
• Use of calculators and structured worksheets to scaffold numeracy skills.
• Sentence starters and oral sentence frames for verbal explanations.
• Extension tasks that challenge more able students (profit prediction and sensitivity analysis).

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Assessment for Learning

• Observation of group work and calculation activities.
• Completion and accuracy of cost and profit calculation worksheets.
• Oral presentation demonstrating understanding of costs and profits.
• Participation in role play and extension tasks.

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Teacher Reflection Prompts

• Were students able to connect their product design with the costs and profit calculations meaningfully?
• Did the hands-on creation help consolidate understanding?
• Were the differentiated tasks effective in meeting diverse learning needs?
• What adjustments are needed for future lessons in this unit?

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This lesson plan offers engaging, active learning aligned with NSW curriculum outcomes in HASS and Mathematics for early Years 1 to 3 students, focusing on fundamental financial literacy concepts through a practical entrepreneurial project. It balances conceptual understanding, numeracy skill development, and creativity in a small-group setting, perfectly tailored for your thematic learning approach.

If you wish, I can also provide a detailed set of printable worksheets and templates for each year level to use alongside this lesson.

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Curriculum Reference Examples

• HASS Stage 1 Content: Understanding business activities and money, collecting and recording data
• Mathematics Stage 1: Use simple addition and subtraction and measure item quantities to solve practical problems
• Economics and Business foundational knowledge: Explore economic choices and purpose of businesses (scaled for younger learners)

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Please let me know if you want materials or ideas for lessons 3, 4, and 5 in this unit!