📊 Part 1: Understanding Break-Even Concepts

1. What are fixed costs?

Costs that change with production volume

Costs that stay the same regardless of production volume

Only the cost of raw materials

The selling price of products

2. Which of these are examples of variable costs? (Select all that apply)

Raw materials

Rent

Packaging

Insurance

3. The break-even point occurs when:

Revenue equals total costs

Fixed costs equal variable costs

Profit is at its maximum

Variable costs are zero

4. Complete the formula: Total Cost = Fixed Costs + (_____________ × Number of Units)

Answer: _________________________________

🧮 Part 2: Break-Even Calculations

Scenario: Sarah's Smoothie Stand has the following costs and pricing:

Fixed costs per month: $800 (rent, equipment)
Variable cost per smoothie: $3.50 (fruit, cups, electricity)
Selling price per smoothie: $8.00

5. Calculate the contribution margin per smoothie (Selling price - Variable cost per unit):

6. Using the formula: Break-even units = Fixed Costs ÷ Contribution Margin, calculate how many smoothies Sarah needs to sell to break even:

7. What is Sarah's total revenue at the break-even point?

8. If Sarah sells 200 smoothies in a month, will she make a profit or loss? Show your working:

📈 Part 3: Analysis and Critical Thinking

9. What would happen to Sarah's break-even point if her rent increased to $1,000 per month? Explain your reasoning:

10. How might understanding break-even analysis help someone decide whether to invest in a business (like buying shares)? Connect this to your previous learning about investment risks:

11. Suggest two strategies Sarah could use to reduce her break-even point:

Strategy 1: _________________________________________________

Strategy 2: _________________________________________________

Break-Even Analysis Worksheet

Break-Even Analysis Worksheet

📊 Part 1: Understanding Break-Even Concepts

🧮 Part 2: Break-Even Calculations

📈 Part 3: Analysis and Critical Thinking

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