Free sample lesson · Entrepreneurship · about 40 minutes
No login needed. A real lesson in the FI format: goal, learn, example, practice with answers.
Goal
By the end of this lesson I can separate fixed and variable costs, set a price that makes a profit, and work out how many units I must sell to break even.
1. Warm-up (5 minutes)
Choose a product you could sell (e.g. iced coffee, tocino, phone cases). Guess: how much does one cost to make, and what would you sell it for?
2. Learn
- Variable cost – changes with each unit (ingredients, packaging).
- Fixed cost – the same each month even if you sell nothing (rent, stall fee, internet).
- Contribution per unit = selling price − variable cost per unit.
- Break-even units = fixed costs ÷ contribution per unit.
Price should also check the market: what do similar sellers charge, and what makes yours worth it?
3. Worked example: iced coffee stall
Per cup: coffee & milk ₱18, ice ₱3, cup, lid & straw ₱9 → variable cost ₱30.
Monthly fixed: stall rent ₱4,000, electricity ₱1,500, permit share ₱500 → ₱6,000.
Price: ₱60. Contribution: 60 − 30 = ₱30 per cup.
Break-even: 6,000 ÷ 30 = 200 cups a month (about 8 cups a day for 26 days). Every cup after that adds ₱30 profit.
4. Try it yourself
A tocino seller: variable cost ₱95 per pack, price ₱150, fixed costs ₱3,300 per month.
- What is the contribution per pack?
- What is the break-even in packs?
- Profit if she sells 100 packs?
- Is “rent” fixed or variable? “Packaging”?
- If she raises the price to ₱160, what is the new break-even?
Show answers
- 150 − 95 = ₱55.
- 3,300 ÷ 55 = 60 packs.
- (100 × 55) − 3,300 = ₱2,200.
- Rent is fixed; packaging is variable.
- Contribution 65 → 3,300 ÷ 65 ≈ 50.8, so 51 packs.
5. Real-life practice (10 minutes)
Use your warm-up product. List real costs (check prices online or at the market), then calculate contribution and break-even.
6. Check your understanding
Write the break-even formula from memory and explain it in one sentence.
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