World Economy · Learn with evidence
Follow a bakery, cleaning service or handmade-product example from labor costs to monthly profit.
Free guided activity · 45 minutes · Ages 14 and up
Before you start: Percentages and basic multiplication.
Learning goal: Distinguish revenue, profit, margin and markup, then test whether a price covers the entered costs.
Preparation: Paper, pencil and calculator. Allow one shared screen for the linked tool, or use the printed exercise offline. Fictional figures are for practice.
Choose a box, completed job or finished product. Use one month throughout. Include materials, your own time, transaction fees, waste and fixed overhead. Keep costs in one category each to avoid counting them twice.
Choose one of three worked examples →Change labor time first, then sales volume. Look at contribution per sale before break-even. More sales cannot cover overhead if each sale has negative contribution. A higher price may change demand, but the workshop does not forecast that response.
Compare prices and sales volumes →Save the estimate on your device. At month end, enter actual average price, units and costs, then load the saved comparison. Explain the largest difference and choose one change to test next month. Profit here is before financing, income taxes and costs not entered.
Try estimate versus actual →Fictional product: price $20, variable cost $12 per sold unit, fixed overhead $400 per month. Expected sales are 100 units; actual sales are 70. Variable cost already includes production labor and fees.
What are expected revenue, profit and break-even sales?
What are expected margin and markup on total cost?
What happened at 70 actual sales?
Exit ticket: Explain one result in your own words and name an assumption that could change it.
Try the worksheet first. These answers explain the reasoning, not just the result.
Revenue = $2,000. Profit = (20 − 12) × 100 − 400 = $400. Contribution is $8 and break-even is 400 ÷ 8 = 50 units.
Total modeled cost is $1,600. Margin = 400 ÷ 2,000 = 20%. Markup on total modeled cost = 400 ÷ 1,600 = 25%. The denominator changes.
Revenue is $1,400; total cost is $1,240; profit is $160. Profit is $240 below the plan. The business still exceeds break-even, but sales were lower than assumed.
Next week: explain why doubling revenue need not double profit. Identify one cost your original example omitted.
For a younger learner, work through the first calculation together. For an extension, change one assumption and defend the new conclusion.
See the related optional paid teaching pack →The complete activity above is free. The linked pack is a separate resource; this activity does not change its contents.