🥪 Breaking Point

AQA A-Level Business (2026) | 3.1.4 Financial management

Your Story

You are Mel Ted-Cheez, launching a gourmet toastie stand at local markets. You've invested £2,000 of personal savings into equipment and need to prove the business can work.

The goal: The prestigious Summer Street Food Festival is selecting vendors. They want to see evidence that you can consistently break even and generate profit.

The challenge: Navigate 6 market days, balancing costs and prices to maximise your profit while managing risk.

What You'll Learn

Calculate break-even output and contribution per unit
Interpret a break-even chart and identify profit/loss zones
Analyse how price and cost changes affect break-even
Understand margin of safety and risk management

🍞

Breaking Point

Breaking Bread

Day

1 of 6

Toasties Sold

0

Total Revenue

£0

Total Profit

£0

Day 1

Millbrook Car Boot Sale

☀️ Sunny

Pitch Fee

£30

Equipment

£20

Travel

£10

Total Fixed

£60

Expected Footfall

40-70

Max Capacity

100

Price Sensitivity

High

Budget location with price-conscious customers. They're looking for value, not gourmet experiences.

👨‍🍳

Artie San

"These customers won't appreciate premium ingredients. Keep costs low."

📊

Max Margin

"My kind of market! Budget ingredients, £5.50, shift volume."

Break-Even Chart

Revenue

Total Costs

Fixed Costs

Your Decisions

Ingredient Quality

Budget ⭐⭐

White bread, processed cheese, basic ham

£1.80

Standard ⭐⭐⭐

Farmhouse bread, mature cheddar, quality ham

£2.40

Premium ⭐⭐⭐⭐

Sourdough, aged gruyère, parma ham

£3.20

Selling Price

Per Toastie

£6.00

£3.00 £10.00

Selling Price £6.00

Variable Cost −£1.80

                            Contribution per unit
                            £4.20
                        

Fixed Costs £60.00

                            Break-Even Point
                            15 toasties
                        

Margin of Safety

25-55 toasties

COMFORTABLE ✓

Confirm Your Decisions

Market Millbrook Car Boot Sale

Fixed Costs £60.00

Ingredients Budget (£1.80)

Selling Price £6.00

                            Contribution
                            £4.20 per toastie
                        

                            Break-Even
                            15 toasties
                        

Expected Sales 40-70 toasties

Market Day in Progress...

0

toasties sold

Break-even target: 15 toasties

Keep selling...

🎉

Day 1 Complete!

PROFIT

+£189.00

Sales Performance

Toasties Sold 60

Break-Even Point 15

Margin of Safety 45 above break-even ✓

Financial Breakdown

Revenue £360.00

Variable Costs −£108.00

Total Contribution £252.00

Fixed Costs −£60.00

Profit/Loss +£192.00

Running Totals

Total Toasties Sold 57

Total Revenue £285.00

Total Profit £192.00

💡 Key Learning

Your contribution of £4.20 per toastie meant every sale after break-even added £4.20 to your profit. You sold 45 toasties beyond break-even: 45 × £4.20 = £189.00. This is why contribution matters!

🏆 Final Results

342

Toasties Sold

£2,052

Total Revenue

£780

Total Profit

5/6

Days Profitable

Trader Profile

THE ADAPTER

You read the market and adjust. Flexible and smart.

🎉 The Summer Festival Wants You!

Consistent performance, smart adjustments, and you survived the tough days. Welcome aboard, Sam!

Your Journey

Key Insights

📊 Contribution Drives Profit

Your average contribution was £4.10 per toastie. Higher contribution means faster profit accumulation after break-even.

🛡️ Margin of Safety is Insurance

Your closest call showed why margin of safety matters. When footfall is uncertain, a buffer protects you.

💰 Fixed Costs Set the Stakes

Higher fixed costs demand either higher margins or higher volume. The festival day proved this - high stakes, high potential.

This simulation has been developed by tutor2u as part of a suite of free teaching resources to support the new AQA A-Level Business specification (first teaching Sept 2026).

📚 Theory Recap: Break-Even Analysis

Key Formulae to Remember

Contribution per unit = Selling price − Variable cost per unit
Break-even output = Fixed costs ÷ Contribution per unit
Margin of safety = Actual output − Break-even output
Total contribution = Contribution per unit × Units sold

Chart Interpretation

• The break-even point is where total revenue = total costs
• Below break-even = loss zone (costs exceed revenue)
• Above break-even = profit zone (revenue exceeds costs)
• Steeper revenue line = higher selling price
• Steeper cost line = higher variable costs

Evaluation Points

Limitations of break-even analysis:
• Assumes all output is sold
• Assumes costs and revenues are linear
• Only works for single products
• Static model — doesn't account for changing conditions
• Doesn't consider cash flow timing

Effects of Changes

Price increase: Higher contribution → Lower break-even → But may reduce demand
Variable cost increase: Lower contribution → Higher break-even
Fixed cost increase: Higher break-even (contribution unchanged)
Higher volume: Greater margin of safety → More profit