Question

Sipho's aunt sells her business and the new owner is not prepared to supply Sipho with free packaging. He now has to buy the packets and pays R50 for 1 000 packets.

a) Calculate what one packet costs him.
b) If Sipho continues to sell the packets at R1 each, calculate the percentage profit that he will make on his peanuts.
c) If Sipho wants to make the same profit on the peanuts as before, calculate what he should charge for a 100 g of peanuts.
d) What practical problem do you foresee in the case of Question 2. c)?
e) Describe how you would advise Sipho to price his peanuts. lu huving a product and selling it at a profit.

Answer 1

a) The cost of one packet is R0.05. b) The percentage profit Sipho will make on his peanuts is 1,900%. c) Sipho should charge R0.20 for 100g of peanuts. d) The practical problem is the fluctuating cost of peanuts. e) Advise Sipho to monitor peanut prices and adjust selling price accordingly.

Step-by-step explanation:

a) To calculate the cost of one packet, we divide the total cost (R50) by the number of packets (1,000): R50 ÷ 1,000 = R0.05 per packet.

b) If Sipho sells the packets at R1 each, his revenue per packet is R1. To calculate the percentage profit, we subtract the cost per packet (R0.05) from the selling price (R1) and divide it by the cost per packet, then multiply by 100: ((R1 - R0.05) ÷ R0.05) × 100 = 1,900%.

c) If Sipho wants to make the same profit as before, he should calculate the cost per 100g of peanuts. Let's assume each packet contains 25g of peanuts. To get the cost of 100g, we divide the cost per packet (R0.05) by the weight per packet (25g) and multiply it by 100: (R0.05 ÷ 25) × 100 = R0.20 per 100g.

d) One practical problem in this case is that the cost of peanuts may vary based on market prices and availability, so it might be challenging for Sipho to maintain a consistent profit margin.

e) I would advise Sipho to regularly monitor the prices of peanuts and adjust his selling price accordingly to ensure a reasonable profit margin while remaining competitive in the market