Question

Tamika's Terrific Tacos sells a beef or chicken taco for $2.50. The ingredients for each taco cost 50¢. Tamika's taco makers Tom, Ted, Tammy, and Tina make $10 an hour and can each make 20 tacos in an hour, which means the labor cost of each taco is 50¢. Tamika has calculated that the cost of rent, utilities and advertising for her store averages 25¢ per taco. Tamika works the counter and pays herself a salary that averages 25¢ per taco. Tamika is left with $1 per taco that she can invest in improving or expanding her business.

How much profit does Tamika's Terrific Tacos generate per taco sold?
A.
$2.50
B.
50¢
C.
$1
D.
25¢

Answer 1

C. $1.00

Explanation:

Costs per taco:

`\begin{tabular}\cline{1-2} \bf Expenditure & \bf Amount \\\cline{1-2} Ingredients & \$0.50 \\\cline{1-2} Labor & \$0.50 \\\cline{1-2} Rent/Utilities/advertising & \$0.25 \\\cline{1-2} Salary & \$0.25 \\\cline{1-2} \bf TOTAL & \bf \$1.50 \\\cline{1-2}\end{tabular}`

Profit per taco:

Profit = Selling price - expenditure

= $2.50 - $1.50

= $1.00

Therefore, $1.00 of profit is generated per taco sold.