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Question

Difficulty: MediumProfit and Loss

A food truck operator buys 3030 pounds of beef at $8\$8 per pound and spends an additional $60\$60 on packaging and spices. From these supplies, the operator prepares 8080 meals and sells them for $6\$6 each. What is the operator's net profit as a percentage of their total cost?

  1. A
    37.5%37.5\%
  2. 60%60\%Answer
  3. C
    80%80\%
  4. D
    160%160\%

Answer

The operator's net profit as a percentage of their total cost is 60%60\%.
The total cost is the sum of the beef ($240\$240) and the packaging/spices ($60\$60), which equals $300\$300. The total revenue is 8080 meals sold at $6\$6 each, equaling $480\$480. The net profit is the revenue minus the total cost ($480−$300=$180\$480 - \$300 = \$180). To find the profit percentage based on the total cost, divide the net profit by the total cost and multiply by 100100: ($180÷$300)×100=60%(\$180 \div \$300) \times 100 = 60\%.

Step-by-Step Solution

1
Calculate the total cost of all supplies.
30 pounds×$8/pound=$24030 \text{ pounds} \times \$8/\text{pound} = \$240. Adding the overhead: $240+$60=$300\$240 + \$60 = \$300 total cost.
The total cost must include both the direct material cost and any additional expenses.
2
Calculate the total revenue from selling the meals.
80 meals×$6/meal=$48080 \text{ meals} \times \$6/\text{meal} = \$480 total revenue.
Total revenue is the amount generated from sales before any costs are deducted.
3
Determine the net profit.
$480 (revenue)−$300 (total cost)=$180 net profit\$480 \text{ (revenue)} - \$300 \text{ (total cost)} = \$180 \text{ net profit}.
Net profit is the amount of money remaining after subtracting all costs from the revenue.
4
Calculate the net profit as a percentage of the total cost.
($180÷$300)×100=60%(\$180 \div \$300) \times 100 = 60\%.
The question asks for the profit percentage based on the total cost.

Key Concept

Calculating net profit by subtracting total expenses from total revenue, and expressing it as a percentage of the total cost.
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Topics

Profit and Loss

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