Question

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. Lost sale are taken as $1 per unhappy customer. Leftover hotdogs can be sold for $5.00/piece. On a particular day in June it rained heavily so the vendor was able to sell only 80.00 hot dogs. Determine the vendor’s profit for that day? Assume there are 30 days in the month.

Answer 1

Answer:

There are 30 days in a month

Hot dogs sold on a regular day = 100 hot dogs
Hot dogs sold on a raint day = 80 hot dogs

Fixed expenses per month = $ (50 + 20 + 10) = $80
Variable cost (Raw Material) = $12 per piece
Variable cost (Packing cost) = $1 per piece
Selling Price = $20 per piece
Left over hot dogs are sold at $5 per piece

Total Sales for the month = (100* 29 days* 20) + (80* 1 day* 20) + (20* 1 day* 5) = $59,700
Total Raw Material Cost = 100 hot dogs* 30 days * 12 = $36,000
Total Packing Cost = 100 hot dogs* 30 days * 1 = $3,000

Now, we will calculate profit for the rainy day where 80 hot dogs were sold

Sales = (80* 1 day* 20) + (20* 1 day* 5) = $1700
Raw Material = 100 * 1 day * 12 = $1200
Packing Cost = 100 * 1 day * 1 = $100

Contribution = $(1700-1200-100) = $400
Less: Fiixed Cost ($80 / 30 days) =$2.67
Proft for the day = $ (400 - 2.67) = $397.33