Profit and Loss is an important concept for seventh graders. These learning topics allow students to learn arithmetic operations with integers and simultaneously build an entrepreneurship spirit. By analysing scenarios involving purchasing goods and services to deliver a product or service, students determine if they end up with money after paying for the goods necessary to operate the business. Profit is earned income (positive integer) after paying for the cost of the materials (and other bills) used to sell the service or product. A loss (negative integer) is incurred when the bills are higher than the revenue earned from the consumer.
- Skill level:
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Things you need
- Candy (small quantity)
- Fake money
Bring candy to class and tell the students how much you paid the vendor for the candy ($1.50). Explain to students that this is a cost or expense.
Give one student (consumer) fake money to purchase candy from you. Ask the student to be the consumer who will purchase candy from you (entrepreneur). Explain the roles to the class.
Charge the student £1.40 for the candy and ask the class did you make a profit after you paid the person (vendor) whom you originally purchased the candy from. The students will say, "Yes, you made 40p".
Explain that the 40p is the profit. Explain and write:
Profit = Revenue - Expenses.
$0.75 (money left over after paying bills) = £1.40 (amount charged customer) - 90p (amount paid to vendor).
Change the scenario to allow a loss to occur. Ask students to create a scenario with a corresponding mathematical sentence.
Tips and warnings
- Be very explicit when explaining the vocabulary terms. Increase the level of difficulty as students begin to understand by adding variable and fixed costs. To increase the level of difficulty, you may also give a discount for additional purchases over a certain quantity.
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