Overview

The Rundown

Materials
Dirt and Worms - Powerpoint
Dirt and Worms - Pricing and Profit Worksheet
Dirt and Worms - COGS Worksheet

Tools
Google Classroom
Edmodo
Zoom
Google Meet

Reinforced Values

The Dirt and Worms activity allows your students to practice calculating COGS by using basic mathematics operations. This activity will set the foundation needed for your students to develop an understanding of pricing and as well as funding.

Intro

How do companies decide how much to sell their products for? The first step is to calculate the Cost of Goods Sold (COGS) – In other words, how much it costs to make one unit of the product. Once they know the COGS, they determine what selling price will yield their desired profit per unit. In this activity we are going to practice calculating COGS that is both educational and tasty!

Preparation

  1. Determine how you will share the activity with your students including the PowerPoint and 2 worksheets.
  2. Review the following Dirt & Worms materials:
    1. PowerPoint
    2. Activity instructions below
      1. View the videos to see an instructor walk through this activity with students.
    3. COGS Worksheet
    4. Pricing & Profit Worksheet
  3. Adjust the “Total Quantity” and “Cost” of each item on Slide 2 of the Dirt & Worms PowerPoint.
    1. Protip: Delete the information from the slide and ask students do this themselves by looking up the information online at Walmart.com or another grocery store.
  4. Review the debrief questions shared in this guide and decide if you would like to share any of those as additional reflection questions or bring the class together via Zoom and debrief using breakout rooms.
    1. Protip: Consider adding to the instructions any parameters around student writing (grammar mechanics, number of sentences, etc.).
  5. Post the activity to your classroom platform for students to access and complete or set up a Zoom classroom session to walk your student through the activity.

Protip: This activity can be leveled up by asking students to select something they want to make using items from their pantry to then repeat the steps of this activity. For example, a PB&J, bowl of cereal, etc.

Protip: Back of the Napkin is a great follow-up activity to analyze break-even and profit goals.

Directions

(NOTE: These directions are written for a collaborative session with students virtually – if not collaborating as a class virtually, you can post pieces of the directions online with the resources listed above.)

  • We will be selling Dirt and Worms. Has anyone not heard of Dirt and Worms?
    • If anyone does not know what Dirt and Worms is, you should explain it to them.
      • It is a delicious mix of chocolate pudding and crumbled Oreos (that is the dirt) with little gummy worm surprises!
  • Let’s assume that we are selling Dirt and Worms to customers and we need to determine our COGS.
  • What is the first thing we should do? Answers will vary.
    • What we want them to figure out is that we can’t determine our COGS and COGS per Unit if we don’t determine what one unit of sale is and what we need to make that one unit.
  • One unit of sale for our business will be one cup of Dirt and Worms. You can hold up a cup to demonstrate.
  • What do we need to make this one cup of Dirt and Worms? Again, you can hold up the ingredients.
    • The cup
    • Chocolate pudding cup
    • Oreo cookies
    • Gummy worms
    • And you can’t eat it without a spoon.
    • What about napkins?
  • You will need to tell your students where on each product they can find the “Total Quantity” for each item. Then share what each is so they can fill in this column.
    • Point out that serving size is not necessarily important because you may not use exact serving sizes when making your product. For example, one serving of gummy worms might be 3 worms but you may decide to use only 2. The total quantity in this case is more important than number of servings.
  • Now it is time to fill in the Cost column. This is what you spent on each. You will need your receipt or research from online grocery store for this column.
  • Now time for the math! It is recommended that you do the pudding row, at the very least, with your students. You may also want to do the Oreo row because you have to do a little more math.
    • The basic formula is: (Cost / Total Quantity) x Quantity per Unit = Unit Cost
  • Let your students work through the math. Then regroup to walk through the calculations and check for understanding.

Pricing and Profit Supplemental:

  • Pricing and Profit is used to determine whether a business model can be profitable. You can follow up the Dirt and Worms COGS Activity with a discussion of pricing and profit.
  • The curriculum includes a Dirt and Worms Pricing and Profit Worksheet you can use as a follow up to the Dirt and Worms COGS Worksheet. This worksheet offers your students the opportunity to use the COGS they have already calculated to determine if they can in fact make a profit off of one unit of Dirt and Worms.

Debrief

Students can complete the debrief on paper by answering the following questions or be put into groups via Zoom to discuss their learnings.

  • What is the difference between fixed costs and variable costs?
    • Were the costs experienced in this activity fixed or variable?
  • What could you have done to decrease the COGS you experienced?
    • How does subjective value affect COGS?
    • Can things outside of your control effect your COGS?
  • What effects do a high COGS have on your Pricing & Profit calculation?
  • Why is it important to pay attention to COGS when developing and producing a product?
    • Can you give some examples of businesses that do things to help with their COGS? (Help students recognize that COGS Chipotle and other restaurants charge for getting “extra” of toppings or condiments.)

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