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

Answer 1

$397.34 (if he sold the 20 leftover hot dogs), $297.34 if he didn't.

Explanation:

We are going to assume that a month has 30 days.

• First, we are going to see how much money the vendor got from selling the 80 hot dogs. He sold 80 hot dogs at 20 dollars/piece = 1600 dollars.

• We need to subtract the amount of money he spent in each hot dog (12 dollars in raw material plus one dollar for packing): 13 dollars x 100 hot dogs he prepared = 1300 dollars

• He also spends a total of 80 dollars per month in truck rent, electricity and other expenses. If we divide this by the amount of days per month we have: 80/30 = 2.66

• The problem doesn't tell us that there were unhappy customers that day so that amount is zero.

• We are going to assume that the vendor sold the remaining 20 hot dogs at 5 dollars/piece. 20 x 5 = 100.

Thus, the profit for that day is:

1600 - 1300 - 2.66 + 100 = 397.34

(Note: If the vendor did not sell the leftover hot dogs and he actually only sold 80 hot dogs, then the profit would be: 1600 - 1300 - 2.66 = 297.34)