A typical person would likely not describe calculating accounting ratios as fun or interesting, but those are the words a recent accounting degree program class at Minnesota School of Business-Elk River used to describe their applied learning project.
The project consisted of each student performing a break-even analysis for a nonprofit organization of their choosing. A break-even analysis looks at how many products or services an organization must sell or produce in order to reach a net income of zero.
“The main goal of the project is to get the students out with clients and have them ask the right questions,” said accounting instructor Renee Malenowski, “then to take that information and translate it into accounting material.”
Accounting degree student, Jackie Sadowski, chose to perform a breakeven analysis on the food and beverages sold at the Church of St. Andrew’s Annual Fall Festival in Elk River, Minn.
Sadowski started her project by interviewing two church employees and gathering data about the expenses and sales of last year’s festival.
Through her research and by applying the breakeven analysis formula, Sadowski discovered that if the festival packaged a burger, bag of chips and a beer for $6.50, it would breakeven after selling 371 meal packages. This is considerably less than what would need to be sold on an individual basis before breaking even.
“Studying the relationship between costs and sales revenue provides a deeper understanding of how many of what item needs to be sold to cover costs,” Sadowski said. “This was a very thought-provoking project, which provided me with more of an insight on how to think like an accountant.”
Sadowski presented her findings to the two initial people she interviewed with and said they are excited to try her meal package and pricing suggestions to increase the festival’s revenue this year.