## Wednesday, June 22, 2016

### The Break Even Point

It always seems as if the idea of a break even point comes up in both Algebra I and II during the section on linear equations and systems of equations.  The examples seem to cover the hiring of two buses for a trip,  comparing cell phone plans, etc but many of these examples seem very unrealistic to my students.

So what are some ways to teach the topic so students see why we might want to know that information.  Saturday, I stopped through the AT&T phone store to get more information on cost of phones and contracts so we could figure out a breakeven point but it turns out they've changed the way they cell phones.

They now spread the cost of the phone over 24 to 36 months plus the monthly charges for usage.  So that now throws the old math problems out the window.  So what else can I use?  The other day I bought a magazine on start-ups your way and much of the information applied to franchises. Think how perfect a franchise is to determine the break even point?

As a teacher, I do teach the break even point when doing linear equations but my students have trouble with the basics of this particular topic because they live in a very small place that has two stores, one hamburger joint,  and a laundromat.  So why not use the information from the magazine in addition to using information from a few sites that provide information on fixed and variable costs.  In fact, students should be able to research the information needed to calculate the break even point.

The thing about the franchising fee itself is that it is often a flat fee plus a continued royalty which is a percent of income.  Entrepreneur magazine has a great article explaining  franchising fees that is well written and not too technical so it is good for English Language Learners.  The fees are a linear equation.  In addition, they same magazine has a nice article on calculating your break even point in a clear way, including examples.

Entrepreneur also has step by step  directions for calculating the break even point.  It is a five step process and each step is explained clearly with an appropriate example.  The examples are clear and easy to understand.  It is easy to find all the actual mathematical equations dealing with break even points but they don't always give the important information on what falls under each part.

Franchise know how is a site designed to help students determine what a fixed cost is or a variable cost.  It provides examples for each type of cost and even has a calculator to help. I would think that the cost of the franchise itself is part of the startup cost because its a one time fee.

Yes, this type of activity might actually be a project or take time to complete.  I have one class a week that is only 40 min long.  I plan things like this for that one day.  I also have to provide step by step instructions since most of my students are classified ELL but these can be done.