Question

A small auto parts business has 640 retail accounts. It lost 5% of those accounts this year. Each loss represented $4,000 in revenue. The parts store's profit margin is 10%. How much did this small company lose this year?

A. $600
B. $5,100
C. $12,800
D. $51,200
E. $$128,000

Answer 1

To calculate the company's loss, multiply the number of accounts lost (32) by the revenue lost per account ($4,000) to determine the total lost revenue ($128,000). The actual profit loss is then 10% of the total revenue loss, resulting in a loss of $12,800.

Step-by-step explanation:

The subject of this question is related to business loss calculations, which falls under the category of Mathematics, specifically applied in a business context.

To calculate the company's loss due to the reduction in retail accounts, we need to determine the number of accounts lost and then calculate the lost revenue based on the revenue per account. Then, the profit margin is used to determine the actual profit lost.

• The number of accounts lost is 5% of 640, which equals 32 accounts.
• Losing each account means losing $4,000 in revenue, thus the total revenue lost is 32 accounts × $4,000 = $128,000.
• With a profit margin of 10%, the actual profit lost is 10% of $128,000 = $12,800.

Therefore, the final answer is the company lost $12,800 this year.