Nigel Sells Hot Dogs At A Market. Each Hot Dog Is A Sausage In A Bread Roll. The Table Shows His Costs. Hot Dogs £4 Each Fee Paid To Market £250 Nigel Sells The Hot Dogs For £4 Each. Bread Rolls 49p Per Pack Of 8
**Nigel's Hot Dog Business: A Case Study**
Understanding the Costs and Profitability of Nigel's Hot Dog Business
Nigel sells hot dogs at a market, and each hot dog is a sausage in a bread roll. The table below shows his costs.
Costs Table
| Item | Cost |
|---|---|
| Hot dogs | £4 each |
| Fee paid to market | £250 |
| Bread rolls | 49p per pack of 8 |
Selling Price and Revenue
Nigel sells the hot dogs for £4 each. To calculate the revenue, we need to know how many hot dogs he sells.
Revenue Calculation
Let's assume Nigel sells x hot dogs. The revenue from selling x hot dogs would be:
Revenue = Number of hot dogs sold x Selling price per hot dog = x x £4 = £4x
Calculating the Cost of Bread Rolls
The cost of bread rolls is 49p per pack of 8. To find the cost of one bread roll, we need to divide the cost by the number of bread rolls in a pack.
Cost of one bread roll = 49p ÷ 8 = 6.125p
Calculating the Total Cost
The total cost of selling x hot dogs would be the sum of the cost of hot dogs, the fee paid to the market, and the cost of bread rolls.
Total cost = Cost of hot dogs + Fee paid to market + Cost of bread rolls = £4x + £250 + (6.125p x x)
Calculating the Profit
The profit is the difference between the revenue and the total cost.
Profit = Revenue - Total cost = £4x - (£4x + £250 + (6.125p x x)) = -£250 - (6.125p x x)
Q&A
Q: What is the selling price of each hot dog? A: The selling price of each hot dog is £4.
Q: What is the cost of bread rolls per pack of 8? A: The cost of bread rolls per pack of 8 is 49p.
Q: How much does Nigel pay as a fee to the market? A: Nigel pays £250 as a fee to the market.
Q: What is the total cost of selling x hot dogs? A: The total cost of selling x hot dogs is £4x + £250 + (6.125p x x).
Q: How can we calculate the profit? A: The profit can be calculated by subtracting the total cost from the revenue.
Q: What is the profit if Nigel sells x hot dogs? A: The profit is -£250 - (6.125p x x).
Q: How can we increase the profit? A: To increase the profit, Nigel can either increase the selling price, reduce the cost of hot dogs, or reduce the fee paid to the market.
Q: What is the minimum number of hot dogs Nigel needs to sell to break even? A: To break even, Nigel needs to sell enough hot dogs to cover the total cost. Let's assume the total cost is £C. Then, the number of hot dogs Nigel needs to sell is:
Number of hot dogs = Total cost / Selling price per hot dog = £C / £4 = C/4
Q: How can we calculate the break-even point? A: The break-even point can be calculated by setting the profit equal to zero and solving for the number of hot dogs sold.
Q: What is the break-even point if the total cost is £C? A: The break-even point is C/4.
Conclusion
Nigel's hot dog business is a simple example of a business that sells a product at a fixed price. The costs of the business include the cost of hot dogs, the fee paid to the market, and the cost of bread rolls. To calculate the profit, we need to subtract the total cost from the revenue. The break-even point can be calculated by setting the profit equal to zero and solving for the number of hot dogs sold.
Recommendations
- Increase the selling price to increase the profit.
- Reduce the cost of hot dogs to increase the profit.
- Reduce the fee paid to the market to increase the profit.
- Calculate the break-even point to determine the minimum number of hot dogs Nigel needs to sell to break even.
Further Reading
- Cost and Revenue Analysis
- Break-Even Analysis
- Pricing Strategies
Glossary
- Revenue: The income generated by the sale of a product or service.
- Cost: The amount of money spent to produce or sell a product or service.
- Profit: The difference between the revenue and the total cost.
- Break-even point: The point at which the profit is zero, and the business is neither making a profit nor a loss.