Business Math Module 2

What is the term that means direct costs of the materials (e.g., for coffee, the ingredients, cup, etc.) needed to make the product.

• Fixed costs

• Cost of goods sold

• Sales Amount

• Operational costs

Costs that change depending on how much you sell, e.g., coffee beans, milk, ice, cups

• Fixed costs

• Operational costs

• Inflation

• Variable costs

Costs that stay the same each month, even if you sell nothing. You must pay them no matter what. For example, rent, insurance, etc.

• Fixed costs

• Variable costs

• Markup

• Value add

How do you calculate profit?

• Cost of goods sold minus selling price

• The sum of variable costs and fixed costs

• Selling price minus the variable and fixed costs

• Number of items sold times the cost per item

A safe business decision, product, or action does not cause big problems and is easy to handle if turns out to be a mistake.

• Moderate profit

• Competitive advantage

• Competitive

• Low-risk

Anything a business does that increases the worth of a product or service, e.g., better product quality/service, better experience, great customer service

• Value add

• Increase cost of goods sold

• Reduce fixed costs

• Raise staff salaries

Products or services that are used together, so buying one makes people more likely to buy the other

• Substitute goods

• Complementary goods

• Luxury goods

• Competing goods

Normally, an Americano coffee costs $1.80. Mr. Piccolo Coffee has a promotion for a 15% Christmas discount if you wear a Santa hat. What is the discounted price?

(a)  

The owner of Mr. Piccolo has decided to reduce his menu offerings. If any item is less than 5% of total sales, he will stop selling it. Last month his total profit was $1,925. Of that, profit from coffee sweet milk was $77. What percentage of profit for that month was from coffee sweet milk sales?

(a)  

The owner of Mr. Piccolo decides to start providing staff health insurance through the National Social Security Fund (NSSF). It costs $5/month per employee. He has 2 employees. Right now, his fixed costs are $250 for rent, $20 for equipment, $80 for electricity, and $200 for salaries. By what percent will his fixed costs go up if he pays for health insurance for his two employees? Round to the nearest hundredth.

(a)