Education Technology

Breakeven Analysis

Published on 06/09/2008

Activity Overview

In this activity, students perform breakeven analysis using the cost and revenue of an enterprise. They will determine the relationship between fixed and variable costs, profits, pricing policy, and the volume of output.

Before the Activity

  • See the attached PDF file for detailed instructions for this activity
  • Print pages 35 - 38 from the attached PDF file for your class
  • During the Activity

    Distribute the pages to the class.

    Follow the Activity procedures:

  • Calculate the quantity of an article to be sold in order to breakeven (revenue = cost), based on the fixed cost, variable cost per unit, and unit price
  • Prepare a graph of revenue versus cost, find the breakeven point, shade the regions representing profit and the regions representing loss
  • Prepare a table displaying number of items, revenue, and cost and indicate where breakeven occurs
  • After the Activity

    Review student results:

  • As a class, discuss questions that appeared to be more challenging
  • Re-teach concepts as necessary