Break Even Analysis Activity | T-Shirt Business - Differentiated with Answers

Break even analysis is commonly used in business to calculate the point at which a business neither makes a profit or a loss. The technique is a business planning tool and uses information about both sales and costs to identify the point in which a business will break even.

If a business predicts sales to exceed the break even point they are predicting a profit and any units over the break even point are referred to as the margin of safety. If a businesses sales are predicted to be less than the break even point, they are predicting a loss and may not produce the product or may look at alternatives such as increasing the selling price or looking for a cheaper supplier of the materials required to produce the item.

With this in mind, the resource provides students with the scenario of a potential business starting who will produce and sell t-shirts. However, before they start they are trying to calculate their break even point.

The resources contains three different versions of the same task using the nandos sauce rating for students to easily understand and relate to. With supporting answers for the tutor.