Session 1 of 5
Short lessons, quick checks, then a full case about a one-person bakery
Session 1 Which things you use for work cost money every month, and which only when you sell? Today you sort them.
Optional entry test comes next.
5 sessions
Session 1: Resources and costs
Session 2: Margin, profit and break-even
Session 3: Your time and stock
Session 4: Final case: Nora's Bun Stall
Session 5: New task and your own business
Your answers and notes are saved after every change, so you can stop and continue later: in this browser, or in your profile if you sign in. An account is optional.
How it works: Read the short theory, then answer each question and press Check. A wrong answer can be tried again. You can open the answer after 1 wrong try, or the solution of a calculation after 2. To continue, answer every question on this page or open its answer.
Every business turns into something people pay for. There are two big groups.
are things: ingredients and materials, packaging, tools and equipment, the space you rent, and goods waiting to be sold.
are people's time, skills and energy. That includes your own hours, even if nobody pays you for them.
Why manage them? Both are limited, and both cost something. Materials cost money and can be wasted. Time cannot be stored or bought back: an hour spent packing boxes is an hour not spent finding new clients.
Which of these is a human resource for Leo?
Hint Ask: is it a thing, or people's time and skills?
"A box of inner tubes" Inner tubes are things Leo buys and uses up, so they are a material resource.
"The garage he rents" Space is a material resource, even when it is rented, not owned.
"The 30 hours a week he can work" Yes. People's time is a human resource, and the owner's own hours count too.
Many owners forget to count their own time because they pay themselves no wage. But your hours are still limited. If the business needs more hours than you have, something suffers: quality, health or sales.
So plan your own time like any other resource: how many hours you have, and what they are spent on.
Leo's friend says: "Your time is free, you are the owner." Which answer is best?
Hint What happens if Leo has more repairs than hours?
"Right: only costs paid in money matter." Unpaid time is still limited. If you ignore it, the business looks better than it really is.
"My time is limited, so I plan it like any other resource." Yes. Leo's 30 hours are a limit: every extra repair has to fit into them.
"Time only matters when I hire someone." A helper's time costs money, but the owner's time is limited too, and it matters from the first day.
Read the short theory, then answer each question and press Check. A wrong answer can be tried again. You can open the answer after 1 wrong try, or the solution of a calculation after 2. To continue, answer every question on this page or open its answer.
Resources turn into costs. To understand your numbers, sort the costs into two kinds.
A grows with every item you make or sell: ingredients, packaging, a delivery fee per order.
A stays the same each month, whether you sell a little or a lot: rent, insurance, a phone plan, a website.
Simple test: if you sell one more item, does this cost grow? Yes: variable. No: fixed.
Mia is thinking about a market stall that costs $40 every Sunday, however many bars she sells there. What kind of cost is it?
Hint If Mia sells 10 more bars on a Sunday, does the stall fee grow?
"Variable, because she pays it every week" It repeats every week, but it does not grow with the number of bars. Repeating is not the same as variable.
"Fixed: it does not change with the number of bars" Yes. It is $40 x 4 = $160 a month whether she sells 5 bars or 50.
"Not a cost, because it is paid only on Sundays" Any money the business pays to work is a cost, however often it is paid.
People can be either kind of cost. It depends on how you pay them.
A helper paid for a fixed shift costs the same on a quiet day and on a busy day: a fixed cost. A courier paid per delivery, or a service that charges per order, is a variable cost.
Fixed costs are a risk when sales fall: you pay them anyway. Variable costs follow your sales, but per item they can be more expensive when sales are high.
Mia can pay a packer $12 an hour for a fixed 10-hour week, or pay a service $1 per parcel. Which statement is true?
Hint Which payment changes when the number of parcels changes?
"Both are variable costs, because both pay for work" Paying for work does not make a cost variable. The packer gets $120 a week however many parcels there are.
"The packer is a fixed cost; the per-parcel service is a variable cost" Yes. The packer's week costs $120 whatever happens; the service costs $1 for each parcel.
"The packer is a variable cost; the service is a fixed cost" It is the other way round: the service grows with each parcel, the fixed week does not.
5 sessions
Session 1: Resources and costs
Session 2: Margin, profit and break-even
Session 3: Your time and stock
Session 4: Final case: Nora's Bun Stall
Session 5: New task and your own business
Before you read: name one mistake you would avoid next time. Think of it, or write it in your Notes.
Add what you want to keep to your Notes in the tool bar. All your notes, block by block, are on the My notes page.
You sell a lot, but is anything left? Today you work out what one sale earns and how many sales cover your fixed costs.
A good place for a break. Your progress is saved in this browser: open the block again to continue from here.
You sell a lot, but is anything left? Today you work out what one sale earns and how many sales cover your fixed costs.
2-3 quick questions on topics from earlier sessions: first on mistakes you made, otherwise on the last topic and an older one. Questions with numbers get new numbers each time.
How it works: Answer each question and press Check. A wrong answer can be tried again. The answer opens after 1 wrong try, the solution of a calculation after 2. To continue, answer every question or open its answer.
Read the short theory, then answer each question and press Check. A wrong answer can be tried again. You can open the answer after 1 wrong try, or the solution of a calculation after 2. To continue, answer every question on this page or open its answer.
is all the money from sales. Not all of it is yours to keep.
First, each item has its own variable costs. What is left from the price after them is the , also called contribution margin. It shows how much each sale adds towards paying the fixed costs and, after that, towards profit.
where:
Tom sells phone cases online for $15.00. Each case costs him $5.50 to buy, $0.50 for packaging and $1.00 for the platform fee per sale. What is his margin per case?
Round to cents. Counted as correct if within $0.01 of the answer.
Hint Subtract every cost that comes with one sale from the price.
How to calculate: $15.00 - $5.50 - $0.50 - $1.00 = $8.00.
To find for a month, multiply the margin by the number of items sold, then subtract the fixed costs.
A common trap is to stop halfway. Margin x items is not profit yet: rent and other fixed costs still have to be paid.
where:
Tom sells 150 cases a month at a margin of $8.00. His fixed costs are $400 a month (storage and his online shop). What is his monthly profit?
Counted as correct if within $1 of the answer.
Hint First margin x items, then subtract the fixed costs.
How to calculate: 150 x $8.00 = $1,200 of total margin. $1,200 - $400 = $800.
Read the short theory, then answer each question and press Check. A wrong answer can be tried again. You can open the answer after 1 wrong try, or the solution of a calculation after 2. To continue, answer every question on this page or open its answer.
The is the number of items you need to sell to cover your fixed costs. At break-even, profit is zero: no loss and no gain.
Each item adds its margin towards the fixed costs, so divide the fixed costs by the margin. Round up to a whole item: you cannot sell half a case.
Below break-even you lose money. Every item above it adds its full margin to profit.
where:
Round up to a whole item.
Tom's fixed costs are $400 a month and his margin is $8.00 per case. How many cases must he sell each month to break even?
Enter the exact whole number.
Hint Divide the fixed costs by the margin per item, not by the price.
How to calculate: $400 / $8.00 = 50 cases a month.
Break-even moves when costs move. A new fixed cost, such as a helper's fixed wage or a bigger studio, raises break-even: you must sell more before you earn anything. A higher price or cheaper materials raise the margin and lower break-even.
This is why owners check break-even before they add a fixed cost.
Tom wants to rent a storage room for an extra $160 a month. His margin stays $8.00 per case. What will his new break-even point be, in cases per month?
Enter the exact whole number.
Hint Which part of the formula changes: the fixed costs or the margin? Add the new cost to the fixed costs first.
How to calculate: ($400 + $160) / $8.00 = 70 cases a month, 20 more than before. More space does not change the margin per case, and a higher fixed cost always raises break-even.
5 sessions
Session 1: Resources and costs
Session 2: Margin, profit and break-even
Session 3: Your time and stock
Session 4: Final case: Nora's Bun Stall
Session 5: New task and your own business
Before you read: name one mistake you would avoid next time. Think of it, or write it in your Notes.
What does an hour of your own work earn, and how much should you make for tomorrow? Today you count your hours and weigh leftovers against lost sales.
A good place for a break. Your progress is saved in this browser: open the block again to continue from here.
What does an hour of your own work earn, and how much should you make for tomorrow? Today you count your hours and weigh leftovers against lost sales.
2-3 quick questions on topics from earlier sessions: first on mistakes you made, otherwise on the last topic and an older one. Questions with numbers get new numbers each time.
Answer each question and press Check. A wrong answer can be tried again. The answer opens after 1 wrong try, the solution of a calculation after 2. To continue, answer every question or open its answer.
Read the short theory, then answer each question and press Check. A wrong answer can be tried again. You can open the answer after 1 wrong try, or the solution of a calculation after 2. To continue, answer every question on this page or open its answer.
A business can show a profit and still pay its owner badly. To see this, divide the monthly profit by the hours you worked that month. This is .
Use the same period for both numbers. If the profit is per month, the hours must be per month too. In the models of this course a month has exactly 4 weeks.
where:
4 is the number of weeks in a month in this course, so H x 4 is your hours per month.
Ruth runs a small cleaning business. Her profit is $1,600 a month and she works 50 hours a week. What is her profit per hour of her own work? (A month = 4 weeks.)
Round to cents. Counted as correct if within $0.05 of the answer.
Hint Make both numbers monthly first: hours per week x 4.
How to calculate: 50 x 4 = 200 hours a month. $1,600 / 200 = $8.00 an hour.
Compare your profit per hour with what you would pay a helper, or with what the same hours could earn elsewhere.
If a helper costs $15 an hour and your hours earn $8, maybe a helper should take the simple tasks while you do the work only you can do, such as finding clients. But a wage is a cost too, often a fixed one. Check the numbers, and try a change on a small scale first.
Ruth could hire a helper for $15 an hour to do part of the cleaning. Which reasoning is best?
Hint A good answer looks at the cost of the helper and at the value of Ruth's freed hours.
"She earns $8 an hour and the helper costs $15, so hiring is always a loss." Too quick. If the freed hours bring new clients, or stop Ruth from burning out, a helper can pay off. The numbers decide.
"She should hire as many helpers as she can: her time is worth more." Wages are a cost. More helpers on fixed hours raise fixed costs and break-even.
"She should work out profit and break-even with the wage, decide what to do with the freed hours, and try it for a short time." Yes. This weighs both sides with numbers and limits the risk with a short trial.
Read the short theory, then answer each question and press Check. A wrong answer can be tried again. You can open the answer after 1 wrong try, or the solution of a calculation after 2. To continue, answer every question on this page or open its answer.
is goods made or bought before they are sold. Making stock means spending money now for sales you only expect. There are two risks.
Too much stock means leftovers. Fresh food may be thrown away; other goods tie up cash on a shelf.
Too little stock means lost sales. A customer who finds nothing to buy brings no margin and may not come back.
A leftover loses what it cost to make. A missed sale loses its margin.
A cake shop spends $2 to make a slice of cake and sells it for $5. A slice left at the end of the day is thrown away, so it loses the $2 spent on it. How much does the shop lose when a customer wants a slice and none is left?
Round to cents. Counted as correct if within $0.01 of the answer.
Hint A leftover loses what it cost to make. A missed sale loses the margin.
How to calculate: $5 - $2 = $3 of margin. Here a missed sale ($3) costs more than a leftover ($2).
Demand changes from day to day: rain, holidays, a busy weekend. Planning for the best day leaves many leftovers. Planning for the worst day turns customers away on most days.
A better way is to look at many past days, see how often each level of demand happens, and compare the average result of a few amounts. No amount is perfect: it is a .
Over the last 8 days the cake shop could have sold 30 slices on 2 quiet days, 45 on 5 normal days and 60 on 1 busy day. Which plan is the best starting point?
Hint Look at how often each kind of day happens, not only at the best or the worst day.
"Make 60 every day, so no customer is turned away" On 7 of 8 days slices are left over. On average the shop keeps about $96 a day, less than with 45.
"Make 30 every day, so nothing is wasted" On 6 of 8 days customers are turned away. On average the shop keeps $90 a day, less than with 45.
"Make about 45, then compare the results over the next weeks" Yes. In this example 45 a day gives about $116 a day on average, more than 60 (about $96) or 30 ($90). Checking again later keeps the plan up to date.
5 sessions
Session 1: Resources and costs
Session 2: Margin, profit and break-even
Session 3: Your time and stock
Session 4: Final case: Nora's Bun Stall
Session 5: New task and your own business
Before you read: name one mistake you would avoid next time. Think of it, or write it in your Notes.
A good place for a break. Your progress is saved in this browser: open the block again to continue from here.
2-3 quick questions on topics from earlier sessions: first on mistakes you made, otherwise on the last topic and an older one. Questions with numbers get new numbers each time.
Answer each question and press Check. A wrong answer can be tried again. The answer opens after 1 wrong try, the solution of a calculation after 2. To continue, answer every question or open its answer.
Ingredients, hours and profit in a one-person bakery
The final task of this block. It uses every lesson: resources, costs, margin, break-even, your own time and stock. The first two steps are checked automatically. In the last two you choose an option and explain it: there is no single right answer.
All people and businesses in this block are fictional. Any similarity to a real business is a coincidence.
Nora bakes cinnamon buns. She rents time in a shared kitchen and sells her buns in two ways: at a farmers' market every Saturday, and by pre-order on Instagram with delivery on Sunday. She does everything herself: buying, baking, selling, answering messages and delivering.
Customers like the buns. Nora's friend says the business "makes $1,300 a month". But Nora works about 45 hours a week and feels tired. Last week she burnt a whole batch.
Nora has two goals. She wants to work 40 hours a week or less. She also needs at least $900 a month from the business to pay her own rent.
Help Nora understand her numbers and decide what to change.
In this model a month has exactly 4 weeks. Money is in US dollars. The monthly profit counts the buns Nora sells (800 a month) and their ingredients. Buns left over on Saturday cost her more: the step about the Saturday batch counts them.
Each step says how it is checked. The Glossary, Notes and Calculator stay at the bottom of the screen.
In this model a month has exactly 4 weeks. Money is in US dollars. The monthly profit counts the buns Nora sells (800 a month) and their ingredients. Buns left over on Saturday cost her more: the step about the Saturday batch counts them.
In this model a month has exactly 4 weeks. Money is in US dollars. The monthly profit counts the buns Nora sells (800 a month) and their ingredients. Buns left over on Saturday cost her more: the step about the Saturday batch counts them.
In this model a month has exactly 4 weeks. Money is in US dollars. The monthly profit counts the buns Nora sells (800 a month) and their ingredients. Buns left over on Saturday cost her more: the step about the Saturday batch counts them.
On Friday night Nora bakes for the Saturday market. Now she bakes 150 buns. Buns are best fresh, so she cannot sell leftovers on Sunday. She gives them to a food bank and gets no money back.
Her notes from the last 8 Saturdays are below. Each bun sold brings $2.50 of margin. Each bun left over loses $1.20 of ingredients. Baking 40 more buns takes Nora about 2 more hours.
All results in this case come from a simple teaching model. They are not a forecast of how real customers or businesses behave.
Your choice: Bake 110
Your choice: Bake 150 (as now)
Your choice: Bake 190
| Option | Quiet Saturday (2 of 8): money left | Normal Saturday (4 of 8): money left | Busy Saturday (2 of 8): money left | Money left after bun costs, average Saturday (before rent) | Leftover buns, average Saturday | Customers turned away, average Saturday | Nora's baking time compared with now |
|---|---|---|---|---|---|---|---|
| Bake 110Your choice | $275 | $275 | $275 | $275 | 0 | 40 | -2 h |
| Bake 150 (as now)Your choice | $227 | $375 | $375 | $338best average | 10 | 10 | no change |
| Bake 190Your choice | $179 | $327 | $475 | $327 | 40 | 0 | +2 h |
No leftovers and 2 hours saved. But on 6 of 8 Saturdays Nora runs out and turns customers away. On average she keeps $63 less per Saturday than with 150 buns, about $250 a month. This makes sense if the forecast says rain, or if Nora badly needs those 2 hours.
The highest average in this model. A few leftovers on rainy days and a few missed customers on busy days: the two risks are balanced.
No customer is turned away. But on 6 of 8 Saturdays buns are left over, and Nora works 2 more hours. On average she keeps $11 less per Saturday than with 150 buns. This makes sense if leftovers could be sold the next day, or if turning regulars away costs her more than this model shows.
The model answer is written by the case author. It shows strong reasoning, not the only right choice. Look at what it does on each line below, then rate your own explanation.
Saved in this browser only.
Checked by code against the case model and the case texts. The code says where each number comes from; it does not judge your reasoning.
This model answer chose another option: compare the reasoning, not the choice.
150 buns: it covers demand on 6 of 8 Saturdays. An extra bun earns $2.50 if sold but loses $1.20 if left over, and 150 gives the best average, $338. It also adds no baking time to Nora's long week.
What makes it strong, line by line:
Use the author's review, the model answer and your self-check to improve your text. Your submitted answer and your self-check stay as they are. The new version is savedin this browser.
In this model a month has exactly 4 weeks. Money is in US dollars. The monthly profit counts the buns Nora sells (800 a month) and their ingredients. Buns left over on Saturday cost her more: the step about the Saturday batch counts them.
Back to the whole month. Nora works 45 hours a week and keeps $1,300 a month, about $7.22 an hour. She wants to work 40 hours a week or less, and she needs at least $900 a month.
She is thinking about four options. The results below come from the case model. For the price change, the model assumes that Nora sells 10% fewer buns. Real customers may react differently.
Your decision: Which option would you recommend to Nora? Go to your choice
All results in this case come from a simple teaching model. They are not a forecast of how real customers or businesses behave.
Keep everything as it is
Profit per month: $1,300 meets the targetNora's hours per week: 45 h misses the targetProfit in a slow month: $900 meets the target
Raise the price to $4.50
Profit per month: $1,460 meets the targetNora's hours per week: 42 h misses the targetProfit in a slow month: $1,028 meets the target
Hire a helper for the Saturday stall
Profit per month: $820 misses the targetNora's hours per week: 37 h meets the targetProfit in a slow month: $420 misses the target
Raise the price and hire the helper
Profit per month: $980 meets the targetNora's hours per week: 34 h meets the targetProfit in a slow month: $548 misses the target
✓ meets a target, ✗ misses it.
| Option | Profit per month | Nora's hours per week | Profit per hour of Nora's work | Break-even, buns per month | Profit in a slow month |
|---|---|---|---|---|---|
| Keep everything as it isYour choice | $1,300✓ meets the target | 45 h✗ misses the target | $7.22 | 280 | $900✓ meets the target |
| Raise the price to $4.50Your choice | $1,460✓ meets the target | 42 h✗ misses the target | $8.69 | 234 | $1,028✓ meets the target |
| Hire a helper for the Saturday stallYour choice | $820✗ misses the target | 37 h✓ meets the target | $5.54 | 472 | $420✗ misses the target |
| Raise the price and hire the helperYour choice | $980✓ meets the target | 34 h✓ meets the target | $7.21 | 394 | $548✗ misses the target |
Your choice: Keep everything as it is
Your choice: Raise the price to $4.50
Your choice: Hire a helper for the Saturday stall
Your choice: Raise the price and hire the helper
"All numbers of each option" above shows ✓ and ✗ for every option.
Safe for money: even a slow month still gives $900. But it does not solve the main problem: 45 hours a week and mistakes from tiredness. It makes sense only as a short pause while Nora prepares another change.
The highest profit and the best result in a slow month, because a higher margin lowers break-even to 234 buns. It misses the hours goal by 2 hours, though Nora could cut 2 hours of admin. The big unknown is the 10%: it is a model assumption. If sales fell by 25%, profit would be $1,100, still above $900. A safe test: raise the price for pre-orders first, or for one month.
Gives Nora much more free time, but profit falls to $820, below her $900 target, and to $420 in a slow month. The fixed wage raises break-even from 280 to 472 buns. It makes sense if Nora's health comes first and she plans to use the free time to grow sales.
The only option that meets both targets in a normal month: 34 hours and $980. But it combines two risks: the reaction to the price is uncertain, and the wage is a fixed cost. In a slow month profit falls to $548. If sales fell by 25% after the price rise, profit would be $620. It makes sense if Nora tests the price first and hires the helper for a short trial.
The author's model answer: strong reasoning, not the only right choice.
Saved in this browser only.
Checked by code; it does not judge your reasoning.
This model answer chose another option: compare the reasoning, not the choice.
I recommend raising the price to $4.50. In this model profit grows to $1,460 and break-even falls to 234 buns, so even a slow month leaves about $1,028, above Nora's $900 target. Her week falls to 42 hours, still 2 hours over her goal, so she should also cut 2 hours of admin, for example by answering messages twice a day. The risk is that customers react more strongly than the model's 10%. I would raise the price for pre-orders first and compare sales over four weeks.
What makes it strong, line by line:
I recommend raising the price and hiring a helper for the Saturday stall. Nora's tiredness is the main problem, and this is the only option that meets both targets: 34 hours a week and $980 a month. The risk is that the $480 wage is fixed, so in a slow month profit could fall to about $548. Before hiring, I would test the new price on pre-orders for a month, then agree on a one-month trial with the helper.
What makes it strong, line by line:
Use the author's review, the model answer and your self-check (and the AI questions, if you asked for them) to improve your text. Your submitted answer and your self-check stay as they are. The new version is savedin this browser.
An AI reads your explanation against the author's rubric, line by line, and asks questions to help you think further. It does not grade you and does not choose an option for you. The author's review and the model answer stay the reference. Numbers are checked by code, not by the AI.
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You looked at one small business through its resources: what it uses, what each resource costs, and what the owner's time is really worth.
Mistakes found in your answers in the lessons, tests, warm-ups and the case are marked and listed first.
5 sessions
Session 1: Resources and costs
Session 2: Margin, profit and break-even
Session 3: Your time and stock
Session 4: Final case: Nora's Bun Stall
Session 5: New task and your own business
Before you read: name one mistake you would avoid next time. Think of it, or write it in your Notes.
A good place for a break. Your progress is saved in this browser: open the block again to continue from here.
2-3 quick questions on topics from earlier sessions: first on mistakes you made, otherwise on the last topic and an older one. Questions with numbers get new numbers each time.
Answer each question and press Check. A wrong answer can be tried again. The answer opens after 1 wrong try, the solution of a calculation after 2. To continue, answer every question or open its answer.
Same ideas, new business. Try the same calculations and reasoning with different numbers.
Ana makes soy candles in a small studio and sells them online. Candles do not spoil, so unsold candles are not wasted. But every candle on the shelf is cash Ana has already spent.
In a normal month Ana sells about 200 candles. For December she expects about 400 orders. In this model each order is one candle, and customers pay for shipping separately.
Packing and shipping take a lot of Ana's time. She is fine working up to 40 hours a week in December, but not more. She also wants to avoid a big loss if December is weaker than expected.
In this model a month has exactly 4 weeks. Money is in US dollars.
In this model a month has exactly 4 weeks. Money is in US dollars.
In this model a month has exactly 4 weeks. Money is in US dollars.
Ana has three ways to handle about 400 orders in December. With the packer or the service, Ana still makes the candles, but she no longer packs and ships them.
The results below come from the case model. They also show what happens if December brings only 300 orders, or as many as 500.
Your decision: Which option would you recommend to Ana? Go to your choice
All results in this case come from a simple teaching model. They are not a forecast of how real customers or businesses behave.
Pack and ship everything herself
Ana's hours per week: 50 h misses the target
Use the fulfillment service
Ana's hours per week: 35 h meets the target
Hire a part-time packer
Ana's hours per week: 35 h meets the target
✓ meets a target, ✗ misses it.
| Option | Profit in December (400 orders) | Ana's hours per week | Profit per hour of Ana's work | Profit with only 300 orders | Profit with 500 orders |
|---|---|---|---|---|---|
| Pack and ship everything herselfYour choice | $3,500 | 50 h✗ misses the target | $17.50 | $2,500 | $4,500 |
| Use the fulfillment serviceYour choice | $2,300 | 35 h✓ meets the target | $16.43 | $1,600 | $3,000 |
| Hire a part-time packerYour choice | $2,300 | 35 h✓ meets the target | $16.43 | $1,300 | $3,300 |
Your choice: Pack and ship everything herself
Your choice: Use the fulfillment service
Your choice: Hire a part-time packer
"All numbers of each option" above shows ✓ and ✗ for every option.
The highest profit in the model, $3,500, but 50 hours a week: above Ana's 40-hour limit. With 500 orders it would be 60 hours. Tired packing means mistakes and late parcels, which this model does not count.
The same profit as the packer at 400 orders, but the cost is variable. If December brings only 300 orders, Ana keeps $1,600 instead of $1,300. The safer choice when the forecast is uncertain. The downside is less control over packing; a few test orders in November would show the quality.
The same profit as the service at 400 orders, more above 400 ($3,300 against $3,000 at 500 orders), less below. The wage is fixed for the month. It makes sense if Ana is confident about December, for example if early orders already show it, and wants control over packing.
The author's model answer: strong reasoning, not the only right choice.
Saved in this browser only.
Checked by code; it does not judge your reasoning.
This model answer chose another option: compare the reasoning, not the choice.
I would use the fulfillment service. December's 400 orders are only a forecast, and the service is a variable cost: if only 300 orders come, Ana keeps $1,600 instead of $1,300 with a packer. At 400 orders both give $2,300 and 35 hours a week, within her 40-hour limit. The risk is packing quality, so I would send five test orders through the service in November.
What makes it strong, line by line:
Use the author's review, the model answer and your self-check (and the AI questions, if you asked for them) to improve your text. Your submitted answer and your self-check stay as they are. The new version is savedin this browser.
An AI reads your explanation against the author's rubric, line by line, and asks questions to help you think further. It does not grade you and does not choose an option for you. The author's review and the model answer stay the reference. Numbers are checked by code, not by the AI.
Do not include personal data. When you ask for AI feedback, your explanation is sent to our AI provider (Anthropic) to write it.
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Now use the same formulas for your own business, or for a business you plan. An item is one unit you sell: a cake, a haircut, a candle, one design project or one hour of your work. If you sell many different things, start with your main product and a typical month.
Rough numbers are fine. This step is optional, and nothing is checked or graded.
Your numbers stay in this browser only. Nothing is sent or checked. They are kept when you start the block over, and you can delete them below. Do not include personal data.
Calculated with the formulas of the lessons. Real results also depend on taxes, seasons and things this simple model does not count.
5 sessions
Session 1: Resources and costs
Session 2: Margin, profit and break-even
Session 3: Your time and stock
Session 4: Final case: Nora's Bun Stall
Session 5: New task and your own business
6 topics
Before you read: name one mistake you would avoid next time. Think of it, or write it in your Notes.
You used the same tools in a business where stock does not spoil and labor can be paid per order.
Your answers, explanations, notes and business numbers stay in this browser. Nobody has graded them: the reviews and model answers are the author's, and the rubric scores are your own self-check.
A tutor gives lessons online and in a small room she rents. Which of these is a human resource for her business?
Hint Ask: is it a thing, or people's time and skills?
"Her laptop and headset" Equipment is a material resource: a thing she uses to work.
"The 20 hours a week she can teach" Yes. Her time and skills are human resources, even though she pays herself no wage.
"The room she rents for lessons" Space is a material resource, even when it is rented.
A designer makes $2,400 profit a month and pays herself no wage. A friend says: "Your time costs nothing, so the business is very profitable." What is missing?
Hint Is the designer's time free just because nobody pays a wage for it?
"Nothing: costs that are not paid in money do not matter" Her hours are limited and have value. If you ignore them, the business looks better than it is.
"Her own hours: how many she works to make that $2,400" Yes. $2,400 for 80 hours a month is very different from $2,400 for 240 hours.
"A wage: she must start paying herself first" No wage is needed to count her time. Divide the profit by her hours to see what her time earns.
A food truck pays $50 for a spot at a street festival for each day it goes there, however many tacos it sells. For the truck, this fee is...
Hint If the truck sells 20 more tacos that day, does the fee grow?
"A variable cost, because it is paid every festival day" It is paid each day, but it does not grow with the number of tacos. Repeating is not the same as variable.
"A fixed cost: it does not change with the number of tacos" Yes. The $50 is the same whether the truck sells 30 tacos that day or 300.
"Not a cost, because the truck owns its kitchen" Any money the business pays to work is a cost, including a fee for a place to sell.
A bakery pays a helper $16 an hour for a fixed 20-hour week. In a busy week sales double. What happens to the helper's pay that week?
Hint The pay is for a fixed number of hours, not for each item.
"It doubles, because wages are variable costs" A wage for fixed hours is the same in a busy week and in a quiet one, so it works like a fixed cost.
"It stays $320 a week: it is a fixed cost" Yes. 20 x $16 = $320 whatever the sales. Paid per item, it would be a variable cost.
"It falls, because each item costs less to make" The helper's pay does not depend on sales here. It stays $320 a week.
A shop sells a tote bag for ${price}. Each bag costs ${cost} to buy, and the platform takes a fee of ${fee} per sale. What is the margin per bag?
Round to cents. Counted as correct if within $0.01 of the answer.
Hint Price minus every cost that comes with one sale.
How to calculate: ${price} - ${cost} - ${fee} = ${answer}.
A potter sells {items} mugs a month at a margin of ${margin} per mug. Her fixed costs are ${fixed} a month (studio and kiln). What is her monthly profit?
Counted as correct if within $1 of the answer.
Hint First margin x items, then subtract the fixed costs.
How to calculate: {items} x ${margin} = ${total} of total margin. ${total} - ${fixed} = ${answer}.
A yoga teacher rents a studio for ${fixed} a month. A class ticket costs ${price}, and each visit costs her ${cost} in towels and booking fees. How many tickets a month must she sell to break even?
Enter the exact whole number.
Hint Find the margin per ticket first. Then divide the fixed costs by the margin and round up.
How to calculate: Margin: ${price} - ${cost} = ${margin}. Break-even: ${fixed} / ${margin}, rounded up: {answer} tickets a month.
A barber's fixed costs are ${fixed} a month, and each haircut adds a margin of ${margin}. He wants to add a second chair for ${extra} more a month. What will his new break-even point be, in haircuts per month?
Enter the exact whole number.
Hint Add the new cost to the fixed costs, then divide by the margin and round up.
How to calculate: (${fixed} + ${extra}) / ${margin}, rounded up: {answer} haircuts a month. A new fixed cost always raises break-even.
A photographer's profit is ${profit} a month. She works {hours} hours a week. What is her profit per hour of work? (A month = 4 weeks.)
Round to cents. Counted as correct if within $0.05 of the answer.
Hint Make both numbers monthly first: hours per week x 4.
How to calculate: {hours} x 4 = {monthHours} hours a month. ${profit} / {monthHours} = ${answer} an hour.
A cleaner hires a helper for {hours} hours a week at ${wage} an hour. How much does the helper cost per month? (A month = 4 weeks.)
Counted as correct if within $1 of the answer.
Hint Hours per week x wage gives the cost of one week. A month has 4 weeks.
How to calculate: {hours} x ${wage} = ${week} a week. ${week} x 4 = ${answer} a month.
A juice bar makes a bottle of fresh juice for ${cost} and sells it for ${price}. Unsold bottles are thrown away in the evening. How much does the bar lose when a customer wants a bottle and none is left?
Round to cents. Counted as correct if within $0.01 of the answer.
Hint A missed sale loses the margin, not the whole price.
How to calculate: ${price} - ${cost} = ${answer} of margin. A leftover bottle would lose only the ${cost} it cost to make.
On its last six market days a flower stall sold 40, 55, 60, 45, 90 and 50 bunches. Flowers left at the end of the day are thrown away. How should the owner decide how many bunches to buy?
Hint One very busy day is not a normal day.
"Buy 90, so that no customer ever leaves without flowers" On five of six days many bunches would be thrown away. Planning for the best day costs money on most days.
"Buy 40, so that nothing is ever thrown away" On five of six days customers would find nothing left, and each missed sale loses its margin.
"Try a few amounts against all six days and compare the leftovers with the lost sales" Yes. Looking at all days shows which amount works best on average. One busy day should not decide the plan.
A bakery bakes {made} croissants. Each one costs ${cost} to make and sells for ${price}. Today it sold {sold}, and the rest are thrown away. How much money did the leftovers lose?
Round to cents. Counted as correct if within $0.01 of the answer.
Hint Count the leftovers first. Each one loses what it cost to make, not its price.
How to calculate: {made} - {sold} = {left} leftovers. {left} x ${cost} = ${answer}.
Resource
Anything a business uses to make and sell its product: materials, equipment, space, money and people's time.
Material resources
Physical things a business uses: ingredients and materials, packaging, tools and equipment, the space it rents, and goods waiting to be sold.
Human resources
People's time, skills and energy, including the owner's own hours, even when nobody is paid for them.
Revenue
All the money from sales before any costs: price x number of items sold.
Variable cost
A cost that grows with every item made or sold, for example ingredients or a fee per order.
Fixed cost
A cost that stays the same each month, whether you sell a little or a lot, for example rent or a wage for a fixed shift.
Margin per item (contribution margin)
Price minus the variable costs of one item. It shows how much each sale adds towards fixed costs and then profit.
Profit
What is left after all costs. For a month: margin per item x items sold - fixed costs.
Break-even point
The number of items at which profit is zero: fixed costs / margin per item, rounded up to a whole item.
Profit per hour
Profit divided by the owner's working hours in the same period. It shows what the owner's time really earns.
Stock
Goods or materials made or bought before they are sold. Too much stock means leftovers; too little means lost sales.
Trade-off
A choice where you get more of one thing by accepting less of another, for example more profit but more working hours.
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