BUSS1 Calculating Costs, Revenues and Profits 2

Sophies Shoes has annual fixed costs of 12 million. Variable costs per month are: raw materials 125 000
and direct labour costs of 550 000. The sales revenue is 6 million per quarter (3 months). Calculate the
profit/(loss) generated each quarter.
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(5 marks)
1

Parras has forecast sales of 1500 units a month with a price of 13.50 for each unit sold. The fixed costs are
forecast to be 1 250 a month and variable costs of 6.25 per unit. Calculate the monthly profit/(loss).
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(5 marks)
Hannahs hairdressers has annual fixed costs of 35 000. The average spend per customer is 45 and the
variable costs are 25% of the average spend. Calculate the annual profit (loss) if there are 2 400 customers a
year.
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(6 marks)
3

The Pizza Palace has fixed costs of 50 000 per annum. The variable costs are 2.35 per pizza and the
average price of a pizza is 6.00. The forecast for the next 6 months is 2 500 customers per month.
Calculate the profit (loss) for this 6 month period.
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(6 marks)
5

A school enterprise team are producing handmade greetings cards. Their variable costs are:Item
Raw materials
Labour costs
Postage to customer

Variable cost per card ()

0.75
1.50
1.00

Fixed costs are 25 a week (assume 4 weeks in a month). The cards will be sold for 5 each. The monthly
sales forecast is 500 cards. Calculate the profit (loss) for the three months the team will be trading.
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(7 marks)

Extension: What are the possible disadvantages of changing

suppliers in order to reduce variable costs?

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