Question

Burger Prince buys top-grade ground beef for $1.00 per pound. A large sign over the entrance guarantees that the meat is fresh daily. Any leftover meat is sold to the local high school cafeteria for 80 cents per pound. Four hamburgers can be prepared from each pound of meat. Burgers sell for 60 cents each. Labor, overhæad, meat, bun and condiments cost 50 cents per burger. Demand is normally distributed with a mean of 400 pounds per day and a standard deviation of 50 pounds per day. What is the possible profit and loss for 1 pound of ground beef?

a. $2.40,$1.00
b. $1.40,$0.20
c. $0.60,$0.20
d. $0.40,$0.20

Answer 1

d. $0.40, $0.20

Explanation:

Given the cost of a 1/4-pound burger is $0.50 (including beef), and its selling price is $0.60, you want to know the possible profit and loss on 1 lb of beef. Each pound is purchased for $1.00 and leftover beef is sold for $0.80 per pound.

Profit

The profit on each 1/4-pound burger is ...

profit = revenue - cost

profit = $0.60 - 0.50 = $0.10

There are 4 1/4-pound burgers in a pound, so the profit per pound is potentially ...

profit per pound = (4 burgers/pound) · ($0.10 profit/burger)

profit per pound = $0.40

Loss

A pound of beef not sold to burger customers costs $1 and is resold for $0.80. The loss is ...

revenue - cost = $0.80 -1.00 = -$0.20

The possible loss per pound is $0.20.

Possible profit and loss per pound are $0.40 and $0.20, respectively.

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