Break-Even Analysis
Essay Practice Activity
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- Discuss the potential of a business to be profitable, when considering legal form of business, tax rates, and break-even analysis..
LearningOutcomes
By completing this activity, you will:
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Essay Introduction
One of the most important considerations when deciding whether to start a business is if it will make enough revenue to support itself. By conducting a break-even analysis you can see exactly how much you have to sell in order to pay the bills, and anything over that will be profit.
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Essay Prompt
The Scenario:
For the past ten years, you've worked at a PETCO Salon as a dog groomer. You're thinking of starting your own dog grooming business. You found a place you could rent that's right next to a popular shopping center, and two of your friends (who are also dog groomers) have agreed to work for you. The problem is that you need to borrow money to start the business and your banker has asked for a breakeven analysis. You have prepared the following cost estimates for your first year of operations:
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You went online and researched grooming prices in your area. Based on your review, you have decided to charge $32 for each grooming. Once you have read through the scenario, please click next to answer each part of the essay prompt.
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Essay prompt: Part 1
Please answer the essay question below.
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Essay prompt: Part 2
Please answer the essay question below.
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Essay prompt: Part 3
Please answer the essay question below.
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Essay Response Guide
Take a moment to review your response using the criteria below. Assess how many of these points you addressed in your response. Once you’re ready to move forward, click “Next” button below to continue.
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Part 3
Part 1
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Essay Prompt
The Scenario:
For the past ten years, you've worked at a PETCO Salon as a dog groomer. You're thinking of starting your own dog grooming business. You found a place you could rent that's right next to a popular shopping center, and two of your friends (who are also dog groomers) have agreed to work for you. The problem is that you need to borrow money to start the business and your banker has asked for a breakeven analysis. You have prepared the following cost estimates for your first year of operations:
You went online and researched grooming prices in your area. Based on your review, you have decided to charge $32 for each grooming. Once you have read through the scenario, please click next to answer each part of the essay prompt.
Return to Part 2
Return to Part 3
Return to Part 1
Step 3: Ways to lower the breakeven point
Step 1: Would you start this business?
It depends — but at $32 per grooming, the workload is very high for modest payoffs. At $38 per grooming, the breakeven looks much more feasible.
Step 4: Summary Table
Step 2: Suggested price
You might charge $38–$40 per grooming. This:
- Keeps the workload manageable.
- Provides room for profit.
- Remains competitive in most markets for full grooming services.
Step 1: Calculate total fixed costs
Step 3: Calculate contribution margin
Contribution Margin = Selling Price – Variable Cost
= $32 – $6 = $26 per dog
Step 4: Calculate breakeven point (in dogs)
Breakeven Units=Fixed CostsContribution Margin\text{Breakeven Units} = \frac{\text{Fixed Costs}}{\text{Contribution Margin}}Breakeven Units=Contribution MarginFixed Costs Breakeven Units=146,00026=5,615.38\text{Breakeven Units} = \frac{146,000}{26} = 5,615.38Breakeven Units=26146,000=5,615.38✅ Breakeven = 5,616 dogs (rounded up)
Step 2: Calculate variable cost per dog
Step 5: Dogs per groomer per day
You have 3 groomers (you + 2 employees).Each works 5 days/week × 50 weeks = 250 days/year. Dogs per groomer per day=5,6163×250=7.49\text{Dogs per groomer per day} = \frac{5,616}{3 × 250} = 7.49Dogs per groomer per day=3×2505,616=7.49 ✅ Each groomer must groom about 7.5 dogs per day. Realistic? If one dog takes about an hour and you work 7 hours a day, this is just barely possible — but it leaves no margin for breaks, setup, or cleanup time. It’s tight but not impossible.
Step 1: New contribution margin
Step 3: Dogs per groomer per day
38−6=3238 - 6 = 3238−6=32
- Contribution Margin = $32 per dog
4,5633×250=6.08\frac{4,563}{3 × 250} = 6.083×2504,563=6.08 ✅ Each groomer must groom about 6 dogs per day. This is much more realistic (6 hours of grooming per day, with 1 hour left for prep, cleanup, and scheduling).
Step 2: New breakeven point
146,00032=4,562.5\frac{146,000}{32} = 4,562.532146,000=4,562.5✅ Breakeven = 4,563 dogs (rounded up)
(2.3) Practice: Essay - Break-Even Analysis
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Created on January 26, 2026
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Transcript
Break-Even Analysis
Essay Practice Activity
START
LearningOutcomes
By completing this activity, you will:
Back
Next
Essay Introduction
One of the most important considerations when deciding whether to start a business is if it will make enough revenue to support itself. By conducting a break-even analysis you can see exactly how much you have to sell in order to pay the bills, and anything over that will be profit.
Back
Next
Essay Prompt
The Scenario:
For the past ten years, you've worked at a PETCO Salon as a dog groomer. You're thinking of starting your own dog grooming business. You found a place you could rent that's right next to a popular shopping center, and two of your friends (who are also dog groomers) have agreed to work for you. The problem is that you need to borrow money to start the business and your banker has asked for a breakeven analysis. You have prepared the following cost estimates for your first year of operations:
Back
You went online and researched grooming prices in your area. Based on your review, you have decided to charge $32 for each grooming. Once you have read through the scenario, please click next to answer each part of the essay prompt.
Next
Essay prompt: Part 1
Please answer the essay question below.
Info
Click here to review the scenario!
Back
Next
Essay prompt: Part 2
Please answer the essay question below.
Info
Click here to review the scenario!
Back
Next
Essay prompt: Part 3
Please answer the essay question below.
Info
Click here to review the scenario!
Back
Next
Essay Response Guide
Take a moment to review your response using the criteria below. Assess how many of these points you addressed in your response. Once you’re ready to move forward, click “Next” button below to continue.
Part 2
Part 3
Part 1
Click on the arrows to learn more!
Back
Next
Thank you for completing this essay activity!
Restart
All instructional content, including AI-assisted adaptations and custom interactive learning activities created on Genially is licensed by Saylor Academy under the 'Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International (CC BY-NC-SA 4.0) license. All Genially proprietary elements such as templates, themes, built-in assets, stock media, and other “Genially Content” remain subject to Genially's Terms of Service and are not covered by this Creative Commons license. These elements must remain embedded in the course and cannot be reused or redistributed independently.
Essay Prompt
The Scenario:
For the past ten years, you've worked at a PETCO Salon as a dog groomer. You're thinking of starting your own dog grooming business. You found a place you could rent that's right next to a popular shopping center, and two of your friends (who are also dog groomers) have agreed to work for you. The problem is that you need to borrow money to start the business and your banker has asked for a breakeven analysis. You have prepared the following cost estimates for your first year of operations:
You went online and researched grooming prices in your area. Based on your review, you have decided to charge $32 for each grooming. Once you have read through the scenario, please click next to answer each part of the essay prompt.
Return to Part 2
Return to Part 3
Return to Part 1
Step 3: Ways to lower the breakeven point
Step 1: Would you start this business?
It depends — but at $32 per grooming, the workload is very high for modest payoffs. At $38 per grooming, the breakeven looks much more feasible.
Step 4: Summary Table
Step 2: Suggested price
You might charge $38–$40 per grooming. This:
Step 1: Calculate total fixed costs
Step 3: Calculate contribution margin
Contribution Margin = Selling Price – Variable Cost = $32 – $6 = $26 per dog
Step 4: Calculate breakeven point (in dogs)
Breakeven Units=Fixed CostsContribution Margin\text{Breakeven Units} = \frac{\text{Fixed Costs}}{\text{Contribution Margin}}Breakeven Units=Contribution MarginFixed Costs Breakeven Units=146,00026=5,615.38\text{Breakeven Units} = \frac{146,000}{26} = 5,615.38Breakeven Units=26146,000=5,615.38✅ Breakeven = 5,616 dogs (rounded up)
Step 2: Calculate variable cost per dog
Step 5: Dogs per groomer per day
You have 3 groomers (you + 2 employees).Each works 5 days/week × 50 weeks = 250 days/year. Dogs per groomer per day=5,6163×250=7.49\text{Dogs per groomer per day} = \frac{5,616}{3 × 250} = 7.49Dogs per groomer per day=3×2505,616=7.49 ✅ Each groomer must groom about 7.5 dogs per day. Realistic? If one dog takes about an hour and you work 7 hours a day, this is just barely possible — but it leaves no margin for breaks, setup, or cleanup time. It’s tight but not impossible.
Step 1: New contribution margin
Step 3: Dogs per groomer per day
38−6=3238 - 6 = 3238−6=32
4,5633×250=6.08\frac{4,563}{3 × 250} = 6.083×2504,563=6.08 ✅ Each groomer must groom about 6 dogs per day. This is much more realistic (6 hours of grooming per day, with 1 hour left for prep, cleanup, and scheduling).
Step 2: New breakeven point
146,00032=4,562.5\frac{146,000}{32} = 4,562.532146,000=4,562.5✅ Breakeven = 4,563 dogs (rounded up)