Costs and Revenue

Lesson Overview

Lesson Number: 5 of 8 in the unit Understanding Needs & Profits
Subject: Business Studies
Year Level: Year 5
NZ Curriculum Area: Social Sciences – Economic World (Level 3)
Duration: 60 minutes
Class Size: 25 students

Curriculum Connection:

Students will explore the concepts of costs and revenue as they relate to small businesses. This lesson aligns with the Economic World strand of the Social Sciences curriculum, where students learn how people and communities make choices about allocating resources. They will develop an understanding of key financial ideas, including how businesses manage income and expenses to generate profit.

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Lesson Objectives

By the end of the lesson, students will be able to:

• Identify the difference between costs and revenue in a business.
• Explain how businesses make a profit.
• Analyse a small business case study and determine strategies for maximising profit.

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Materials Needed

• Large A3 paper and markers
• Printed case studies of real NZ small businesses (simplified for Year 5 learners)
• Small fake "money" for activity (can be teacher-made or toy money)
• Whiteboard and markers

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Lesson Structure

1. Introduction & Hook (10 minutes)

Engage: "Opening a Hot Chocolate Stand"

• Begin with a scenario: "Imagine you and your friend decide to open a hot chocolate stand outside your school. What do you need to spend money on before you start?"
• Record student responses on the whiteboard under the heading Costs (e.g., cups, ingredients, advertising).
• Then ask, “How do you make money from your hot chocolate stand?”
• Record responses under Revenue (e.g., selling each cup for $2).
• Introduce the concept of profit: Revenue – Costs = Profit.

2. Teacher-Led Explanation (10 minutes)

• Explain that costs are what a business spends money on to operate.
• Revenue is the money a business makes from selling goods or services.
• Discuss how businesses must balance these to ensure they make a profit (the money left after paying all costs).
• Show a simple example on the board:
  • If a lemonade stand sells 10 cups at $2 each, how much revenue do they get? ($20)
  • If they spend $10 on supplies, what is their profit? ($10)

3. Small Business Case Study (20 minutes)

Step 1: Pair Work Assignments (5 minutes)

• Each pair of students receives a case study of a real NZ small business (e.g., a local bakery, a surfboard rental business, a mobile dog grooming service).
• The case study outlines the costs, revenue, and other business challenges.

Step 2: "Cost vs. Revenue" Analysis (10 minutes)

• Students highlight the costs in one colour and revenue in another.
• They calculate approximate profit based on the figures provided.
• Each pair creates a Profit Plan by listing ideas for reducing costs or increasing revenue.

Step 3: Share & Discuss (5 minutes)

• Each pair shares one key observation with the class.
• Discuss: What strategies could each business use to increase profit?
• Encourage students to think creatively (e.g., discounts for regular customers, promoting on social media, offering new products).

4. Reflection & Exit Activity (15 minutes)

The ‘Shark Tank’ Mini Pitch

• Each student individually writes a one-minute pitch for a small business idea, describing:
  • The product or service
  • Expected costs and revenue
  • How they plan to maximise profit
• Three or four students present their pitch to the class in a fun ‘Shark Tank’ style, with the class pretending to be investors!

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Assessment & Wrap-Up

Formative Assessment:

• Observe student explanations during the case study activity.
• Listen for accurate use of key terms (profit, cost, revenue).

Exit Ticket:

Before leaving, each student writes one profit tip for a small business on a sticky note and adds it to the "Money Smart Wall."

Extension Activity:
For homework, students can interview a local small business owner (e.g., a family member or neighbour) and ask about their biggest business challenge.

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Teacher Reflection Notes

• What worked well? (Engagement level, understanding)
• Areas to improve: (Were students able to grasp profit calculations?)
• Adjustments for next time: (More time for case studies?)

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Why This Will ‘Wow’ Teachers

This lesson takes an interactive, hands-on approach to financial literacy, linking concepts to real-world New Zealand businesses rather than generic textbook examples. The inclusion of a ‘Shark Tank’ pitch adds excitement and engagement, while the Money Smart Wall allows for ongoing learning beyond the lesson. By incorporating roleplay, decision-making, and teamwork, this lesson fosters critical thinking and entrepreneurial skills at an age-appropriate level.

Would love to hear how your students react to this engaging business challenge! 🚀