Question

Scott recently opened a new business located in the local mall. He decided to write a list of his monthly costs to help him set his monthly sales goals. Below is the list of his monthly costs. Label each cost as fixed or variable, and use the information to answer the questions on the next page. (Show your math in the empty space at the bottom of the page.)

1. Does Scott have more variable or fixed costs? 2. If Scott sells 1,100 items at $11 per item. What does he earn from sales for the _ month? 3. With those sales, does Scott make a profit for the month? _ 4. How much of a profit or loss does Scott make for the month? _ 5. If Scott’s monthly sales stay relatively the same what is the amount of profit or _ loss for the year? 6. If Scott's monthly sales stay relatively the same, can he hire an employee with an _ average monthly salary of $1,000? 7. What could Scott do to improve his profit? _ _ _ _ _"/>

Answer 1

Scott can categorize his monthly costs as fixed or variable in order to set monthly sales goals. He can determine whether he has more fixed or variable costs by analyzing his list of costs.

Step-by-step explanation:

Scott can categorize his monthly costs as either fixed or variable costs to help him set his monthly sales goals.

Fixed costs are costs that do not change regardless of the level of production. Examples of fixed costs for Scott's business could be rent for the store space or the cost of equipment.

Variable costs, on the other hand, change with the level of production. Examples of variable costs for Scott's business could be the cost of raw materials or the cost of hiring employees.

1. To determine whether Scott has more variable or fixed costs, he would need to compare the number of costs that fall into each category. By analyzing his list of monthly costs, Scott can count the number of costs that are fixed and the number that are variable and then determine which category has a larger count.
2. To calculate Scott's earnings from sales for the month, you would multiply the number of items sold (1,100) by the price per item ($11). This would give you a total sales revenue.
3. Whether Scott makes a profit for the month depends on his total sales revenue and his total costs. If his total sales revenue exceeds his total costs, then he would make a profit. If his total sales revenue is less than his total costs, then he would have a loss.
4. To determine the amount of profit or loss, you would subtract Scott's total costs from his total sales revenue. If the result is positive, then it would be the amount of profit. If the result is negative, then it would be the amount of loss.
5. To calculate the amount of profit or loss for the year, you would multiply the amount of profit or loss for the month by the number of months in a year.
6. Whether Scott can hire an employee with an average monthly salary of $1,000 depends on his monthly sales and his total costs. If hiring an employee with that salary would still allow him to make a profit or have a small enough loss, then he could hire an employee.
7. To improve his profit, Scott could consider strategies such as increasing his sales revenue, reducing his costs, or finding ways to increase his profit margins.