Question

A restaurant sells burritos for $8.00 each. The cost of the meat is $1.50 and the cost of other ingredients is $1.00 for each burrito.

4.What is the profit the restaurant makes from selling 100 burritos? Does the restaurant make money or lose money? Explain

Answer 1

550$ profit

The restaurant makes money (explained at the bottom.)

Explanation:

In order to get rid of the potential loss and make it easier to calculate we are going to remove the cost of the meat and other ingredients from our calculations.

(8$-1.5$-1$) x (x)

That leaves us with 5.5$ per burrito (post manufacturing price), so that we can calculate raw profit.

(5.5$)(x)

We are now going to replace x with 100 so that we can determine how much money we gain from 100 burritos in total sold at 5.5$ per burrito.

(5.5$)(100) = 550$

(pre-tax)

The price of selling the burrito is more than the cost of the manufacturing of it, therefore they would be making money on every burrito sold, 5.5$ to be exact.