Question

1.A vendor prepares 100.00 hotdogs every day and sells at $18.00 /piece. For each hot dog, he spends $10.00 in the raw material. Additionally he spends $1.02 for packing each hotdog and monthly $54.00, $21.00, $12.00 as food truck rent, electricity and other expenses respectively. On a particular day in June 114.00 people came wanting the hotdog. Vendor thinks $5.00 per lost sale. Determine vendor’s profit for that day? Assume there are 30 days in the month.

2.

A restaurant prepares 200.00 pizza slices and sells them at a rate of $12.00/slice. Expenses for the restaurant include raw material for pizza at $4.00 per slice, $101.00 as monthly rental and $40.00 monthly as insurance. Restaurant is open only for 25 days in a month. Today there was a party at nearby office so the demand for pizza went up to 212.00 slices. Due to lack of availability vendor could not fulfill the demand and analyzed a lost sale as $6.00 per item. How much profit could the restaurant earn today?

3.

A restaurant prepares 200.00 pizza slices and sells them at a rate of $13.00/slice. Expenses for the restaurant include raw material for pizza at $5.00 per slice, $108.00 as monthly rental and $50.00 monthly as insurance. Restaurant is open only for 25 days in a month. Today there was a party at nearby office so the demand for pizza went up to 224.00 slices. Due to lack of availability vendor could not fulfill the demand and analyzed a lost sale as $5.00 per item. How much profit could the restaurant earn today?

4.

A vendor prepares 100.00 hotdogs every day and sells at $20.00/piece. For each hot dog, he spends $12.00 in the raw material. Additionally he spends $1.00 for packing each hotdog and monthly $50.00, $20.00, $10.00 as food truck rent, electricity and other expenses respectively. On a particular day in June it rained heavily so vendor was able to sell only 80.00 hot dogs. For finishing the stock he sold remaining hotdogs for $5.00/piece. Determine vendor’s profit for that day? Assume there are 30 days in the month.

Answer 1

Solution 1:

Price per hot dog = $18

Variable cost per hot dog = Raw material + Packing cost = $10 + $1.02 = $11.02

Fixed cost for the month = $54 + $21 + $12 = $87

Fixed cost for 1 day = $87/30 = $2.90

Production per day = 100 hot dog

Demand on particular day of june = 114

Lost sale = 114-100 = 14 hot dog

Loss for lost sale = 14*5 = $70

Profit for day = Sales Qty * (Sale price - Variable cost per unit) - Fixed cost for day - Loss of lost sale

= $100 (18 - 11.02) - $2.90 - $70 = $625.10

Solution 2:

Price per Pizza Slice = $12

Variable cost per Pizza Slice = $4

Fixed cost for the month = $101 + $40 = $141

Operating days in a month = 25

Fixed cost for 1 day = $141/25 = $5.64

Production per day = 200 Pizza Slice

Demand on particular day = 212

Lost sale = 212-200 = 12 Pizza Slice

Loss for lost sale = 12*6 = $72

Profit for day = Sales Qty * (Sale price - Variable cost per unit) - Fixed cost for day - Loss of lost sale

= $200 (12 - 4) - $5.64 - $72 = $1,522.36

Solution 3:

Price per Pizza Slice = $13

Variable cost per Pizza Slice = $5

Fixed cost for the month = $108 + $50 = $158

Operating days in a month = 25

Fixed cost for 1 day = $158/25 = $6.32

Production per day = 200 Pizza Slice

Demand on particular day = 224

Lost sale = 224-200 = 24 Pizza Slice

Loss for lost sale = 24*5 = $120

Profit for day = Sales Qty * (Sale price - Variable cost per unit) - Fixed cost for day - Loss of lost sale

= $200 (13 - 5) - $6.32 - $120 = $1,473.68

Solution 4:

Price per hot dog = $20

Variable cost per hot dog = Raw material + Packing cost = $12 + $1 = $13

Fixed cost for the month = $50 + $20 + $10 = $80

Fixed cost for 1 day = $80/30 = $2.66

Production per day = 100 hot dog

Demand on particular day of june = 80

Selling price of remaining hot dog = $5 per hot dog

Profit for day = Sales - Variable Cost - Fixed Cost

= (80*20) + (20*5) - (100*13) - 2.66 = $397.34