Exercises: Business costs, revenue, and profit

The coffee shop "El Rincón" has the following costs: premises rent, coffee beans, fixed salary of the waiter, cardboard cups, monthly fee for the card payment terminal, and napkins. Classify them into fixed costs (they exist even if no one comes) and variable costs (they increase with every coffee sold), and explain what happens to each group in August when the neighborhood is empty.

Define total revenue, total cost, and profit, and calculate them in this case: at the market, Julia sells $40$ bracelets at $\$60$ each; the materials for each bracelet cost her $\$10$ and the stall cost $\$400$. How much revenue does she take in, how much does she spend, and how much profit does she make?

The figure shows the total revenue (green line) and total costs (red line) of Valeria's group's T-shirt stall, based on the number of T-shirts sold. Each T-shirt is sold for $\$60$, the materials for each cost $\$20$, and the fixed costs of the stall are $\$1\,200$.

1. a) Do the calculations to find how many T-shirts must be sold for total revenue and total costs to be equal, and explain what the point marked with the question mark represents.
2. b) Explain what happens on the graph to the left and to the right of that point (where there are losses and where there are profits) and what would happen to the point if fixed costs increased.

The bicycle repair shop "La Rueda" pays $\$18\,000$ per month in rent and utilities, regardless of how many repairs it carries out. It charges $\$600$ per repair and parts cost an average of $\$200$.

1. a) Calculate the margin left by each repair and how many repairs are needed per month to cover fixed costs.
2. b) If it carried out $60$ repairs this month, calculate its profit.
3. c) Explain what would happen to these figures if the landlord raised the rent.

The food truck "El Perrito Viajero" sells each hot dog for $\$100$; the roll, sausage, and ingredients cost $\$40$ per hot dog, and the monthly fixed costs (insurance, permits, fuel) are $\$12\,000$.

1. a) Calculate the profit if it sells $250$ hot dogs.
2. b) Calculate how many hot dogs it needs to sell per month to avoid losing money.
3. c) To attract customers, it is considering lowering the price to $\$80$: calculate the new break-even point and advise whether this move could work out well or badly.

The bakery "Dulce Vera" sells each cake for $\$360$. Until now, the ingredients for each cake cost $\$120$, but chocolate prices have gone up and they now cost $\$160$. The bakery's fixed costs are $\$9\,600$ per month.

1. a) Calculate how many cakes it had to sell per month to cover costs before the price increase.
2. b) Calculate how many it needs now.
3. c) Propose two decisions to return to the previous figure without reducing quality, and verify them with numbers.

The local delivery app "RepartoSur" charges $\$60$ per order and pays $\$40$ to the delivery driver who carries it out. Its fixed costs (office, licences, advertising) are $\$40\,000$ per month.

1. a) Calculate how many orders it needs per month to cover costs.
2. b) Last month it fulfilled $1,700$ orders: calculate the result and reason whether the business should close now or hold on, taking into account that its orders are growing every month.
3. c) Propose two measures (increasing the price to $\$70$, charging restaurants a fixed monthly fee) and analyse a risk associated with each.

The stationer's "El Tintero" sells $100$ backpacks a month for $\$500$ each; each backpack costs $\$240$ from the supplier, and its fixed costs are $\$20\,800$ per month. The owner is considering lowering the price to $\$440$ and believes that doing so would increase sales to $150$.

1. a) Calculate the current profit.
2. b) Calculate the expected profit with the discount and decide whether it is worthwhile.
3. c) Calculate how many backpacks it would need to sell at $\$440$ to make exactly the same profit as now, and assess the risk of the discount if sales do not rise as much as expected.

"As long as I sell, the business is going well." Bruno sells customised T-shirts for $\$200$ each; each one costs him $\$180$ in total for the T-shirt and ink, and he pays $\$3\,000$ per month for his workshop-storage unit. This month he has sold $100$.

1. a) Calculate his financial result for the month and explain why selling a lot is not enough: use the margin per T-shirt and fixed costs.
2. b) Calculate how many T-shirts he needs to sell per month just to cover costs.
3. c) Propose two solutions (raising the price to $\$240$, sharing the workshop with another craftsperson) and verify with numbers that they work.