For a 50-minute introductory business class. Paper and a calculator are sufficient. The T-shirt business and all figures are fictional. Print the teacher key separately from the student brief.
Name: __________________ Class: __________________
Preparation and learning evidence
Before class, check that students can multiply a price by a quantity and subtract costs. Model one unrelated example if needed. Organize pairs, with one student calculating and the other checking assumptions; switch roles after the first round. The objective is to calculate contribution, recommend a price, and revise the recommendation when costs change. Collect a calculation table and an individual exit response.
Student instructions and 50-minute sequence
| Price | Units sold | Revenue | Contribution at $14 cost | Contribution at $16 cost |
|---|---|---|---|---|
| $18 | 100 | |||
| $24 | 70 | |||
| $30 | 45 |
Your team sells made-to-order T-shirts. Variable cost is $14 per shirt. For this simplified exercise, only shirts sold are produced, and fixed costs are excluded. The provided demand estimates are assumptions, not customer research.
- Minutes 0–5: Predict which price will earn the most total contribution. Write your reason before calculating.
- Minutes 5–15: Calculate revenue as price × units sold. Calculate total contribution as (price − variable cost) × units sold for all three options.
- Minutes 15–25: Choose a price. Explain the tradeoff between contribution per shirt and total demand. Identify one assumption you would test with customers.
- Minutes 25–35: Your teacher reveals that printing costs rise by $2 per shirt. Keep the original demand estimates for this round. Recalculate and decide whether to revise your price.
- Minutes 35–45: Compare recommendations with another pair. Explain why the highest revenue is not necessarily the highest contribution.
- Minutes 45–50: Individually answer: what changed your decision, and what new evidence could change it again?
Student response sheet
My prediction and reason
My revenue and contribution calculations
My recommendation and demand assumption
My revised calculation after the cost change
What I would test with customers next
Teacher answer key: contribution is not net profit
| Price | Assumed sales | Revenue | Contribution at $14 cost | Contribution at $16 cost |
|---|---|---|---|---|
| $18 | 100 | $1,800 | $400 | $200 |
| $24 | 70 | $1,680 | $700 | $560 |
| $30 | 45 | $1,350 | $720 | $630 |
Under these assumptions, $30 produces the highest contribution in both rounds. The $18 option has the highest revenue. Neither calculation establishes net profit because rent, equipment and other fixed costs are absent. At the original cost, the $30 price needs at least 44 sales to exceed the $700 contribution from 70 sales at $24: 44 × $16 = $704. That narrow margin makes demand evidence important.
A student may recommend a different price if they clearly identify a changed assumption and calculate its consequences. Do not award full reasoning credit for selecting $30 without explaining the evidence.
A common 12-point classroom rubric
Score each criterion from 0 to 3: 0 missing, 1 attempted with major gaps, 2 mostly correct with a specific gap, 3 accurate and supported. Share the criteria before students work.
| Criterion | Evidence for full credit |
|---|---|
| Calculation | Correct formula, units and totals for both rounds |
| Decision | Compares at least two prices using contribution and demand |
| Revision | Explains how the cost change affects the recommendation |
| Reflection | Names an uncertain assumption and a feasible way to investigate it |
Calibrate by scoring one anonymous sample together. Grade the individual exit response separately when you need evidence of each student's understanding. For younger learners, supply the formula and partially complete one row. For advanced students, add a fixed cost or a demand range and ask when the preferred option changes. In online classes, use a shared table and require each student to submit their own explanation.