Starting a Business & (Career Planning from Personal Financial Planning)

Sam is planning to start a pool cleaning company from his home. He has decided on a radius of 30 miles from his home as a region of operation. After surveying the region of operation, he found that 43% of the homes in the region have a swimming pool. If there are 36,248 homes within a 30 mile radius of Sam’s home, approximately how many potential customers does Sam have?
a.
1,087
b.
1,559
c.
10,874
d.
15,587
D.) 15,587
Korey is planning to open a comic book store. When the store opens, he plans to be the only employee. As the business grows, he will extend his hours of operations and hire additional employees as necessary.

In Korey’s business plan, this information should be included in the _____ component.
a.
financial analysis
b.
organizational plan
c.
executive summary
d.
implementation plan

B.) Organizational Plan
Which of the following is not a component included in a standard business plan?
a.
executive summary
b.
employee summary
c.
market analysis
d.
financial analysis
B.) Employee Summary
The executive summary component of a business plan is to describe _____.
a.
where the funds to start and operate your business will come from, when you expect to see profit, and how much profit you expect to see
b.
c.
d.
Sam is planning to start a pool cleaning business from his home. He has developed the following cost analysis for the set-up and operation for the first year of his business. He has \$9,000 in savings and \$23,000 in credit that he can use for the business. Will Sam be able to afford the operational costs of the first year of business on his own?

Item
Cost
Truck
\$9,000
Pool Cleaning Supplies
\$6,000
Payroll
\$23,000
\$1,500
a.
No, Sam will be short \$7,500.
b.
No, Sam will be short \$15,500.
c.
Yes, Sam will have \$7,500 to spare.
d.
Yes, Sam will have \$15,500 to spare.

A.) No, Sam will be short \$7,500.
Korey is planning to open a comic book store. He has developed the following expense breakdown for set-up and operation for the first year. Korey has \$8,500 in savings and \$25,000 in inheritance money to use to open his store. If Korey doesn’t make any changes to his initial expenses, what percent of the total set-up and operation expense will have to be funded through loans or investors?

Expense
Amount
Rent
\$10,800
Insurance
\$3,000
Store Fixtures
\$2,700
Computer and Cash Register
\$1,200
Inventory
\$17,400

a.
4.6%
b.
9.5%
c.
45.6%
d.
95.4%

A.) 4.6%
Which of the following is not a component included in a standard business plan?
a.
implementation plan
b.
organization plan
c.
market analysis
d.
credit analysis
D.) Credit Analysis
Sam is planning to start a pool cleaning business. He expect to make a profit of 45,000 in his first year of business, after which he profits to increase by 5.5% annually for the next 5 years.

Sam’s business will cost \$49,500 to set up and run for the first year. Sam then expects an annual operational expense total of \$30,500. According to Sam’s model, how long will it take Sam to see an overall profit in his business (where total profits exceed total expenses).
a.
Sam will see an overall profit in his first year of business
b.
Sam will see an overall profit in his second year of business
c.
Sam will see an overall profit in his third year of business
d.
Sam will see an overall profit in his fourth year of business.

B.) Sam will see an overall profit in his second year of business.
Korey is planning to open a comic book store. In his first year of operation, Korey expects to average \$1,000 of profit each month. He then expects profits to increase by 6% each year for the next 4 years. How much does Korey expect to make in profits in his fifth year of operation?
\$15,149.72
b.
\$16,058.71
c.
\$31,120.46
d.
\$32,987.69
A.) \$15,149.72
The profits of Korey’s comic book store for its first four years are outlined below. According to this information, what would be… for Korey to quote as expected profits in the next year in his new business plan?
Year Profits
1 \$14,250.00
2 \$15,390.00
3 \$16,621.20
4 \$17,950.90

a.
\$20,550.19
b.
\$19,090.90
c.
\$19,280.60
d.
\$19,386.97

D.) \$19,386.97
Sam is planning to start a pool cleaning business from his home, but has realized that he does not have enough money in savings or credit to pay for the set-up costs and first year of operation. Which of the following would not be a good way for Sam to get the money to start his business?
a.
Talk to a bank about a business loan for the missing funds.
b.
c.
Purchase a \$3,000 compact car instead of a truck for his business.
d.
Find a business partner to share the initial expenses.
C.) Purchase a \$3,000 compact car instead of a truck for his business.
Sam is planning to start a pool cleaning business. The business comes with a set-up and first-year operational cost of \$39,500. Sam has \$9,000 in savings and \$12,000 in credit that he has decided to invest in his business. Sam would like to obtain the rest of the money required to open his business from investors.

This is information Sam should include in the _____ component of his business plan.
a.
organization plan
b.
financial analysis
c.
executive summary
d.
implementation plan

D.) Implementation Plan
Which of the following is not required by lenders and investors?
a.
master plan
b.
organization plan
c.
market analysis
d.
financial analysis
A.) Master Plan
At his comic book store, Korey’s Comics, Korey sells approximately \$3,250 in comic books each month. But as a comic book dealer, Korey only pays \$1,285 for these comic books. Korey’s monthly operating expenses, including labor, are \$875.

Calculate Korey’s monthly gross profit. (net income).
a.
\$1,090
b.
\$1,965
c.
\$2,375
d.
\$2,840

B.) \$1,965
Below is last month’s business income statement for Korey’s Comics. Using the information provided in the statement, determine both the gross profit and net income for Korey’s Comics last month.

Korey’s Comics

Revenue
Sales:
\$5,670

Returns:
\$185

Net Sales:

Cost of Goods Sold
Beginning Inventory:
\$625

Purchases:
\$1,460

Goods Available for Sale:

Ending Inventory:
\$665

Total Cost of Goods Sold:

GROSS PROFIT:

Operating Expenses
Wages:
\$1,230

Rent:
\$650

Utilities:
\$185

\$90

Taxes:
\$125

Total Operating Expenses:

NET INCOME:
a.
\$4,065; \$1,785
b.
\$5,485; \$1,785
c.
\$4,065; \$2,280
d.
\$5,485; \$2,280

A.) \$4,065; \$1,785
Last year, Rusty’s Tools experienced \$67,550 in net sales, creating a gross profit of \$50,338. If Rusty had a total operating expense of \$35,200 last year, what was his net profit margin?
a.
22.4%
b.
52.1%
c.
74.5%
d.
79.0%
A.) 22.4%
At Sam’s Swimming Pool Cleaning, Sam charges each of his 85 customers \$25 per week for 52 weeks of service every year. Since pool cleaning is a service, it has no cost other than labor and supplies, which cost Sam \$48,000 each year.

Calculate Sam’s annual net income.
a.
\$2,125
b.
\$4,420
c.
\$62,500
d.
\$110,500

D.) \$110,500
Last month, Korey’s Comics had a gross profit of \$4,370 and a net income of \$3,500. Calculate Korey’s operating expenses for last month.
a.
\$787
b.
\$870
c.
\$7,870
d.
\$8,700
B.) \$870
Which of the following equations correctly describes how to calculate gross profit?
a.
gross profit = (net sales) – (cost of goods sold)
b.
gross profit = (cost of goods sold) – (net sales)
c.
gross profit = (net income) – (operating expenses)
d.
gross profit = (operating expenses) – (net income)
A.) gross profit = (net sales) – (cost of goods sold)
Last month, Korey’s Comics had \$4,350 in net sales with a gross profit of \$3,320 and a net income of \$1,850. Calculate Korey’s net profit margin.
a.
42.5%
b.
55.7%
c.
76.3%
d.
179.5%
A.) 42.5%
Bill owns a company (Bill’s Gates) that manufactures fence panels. Bill’s Gates had a gross profit margin last quarter of 33%. Which of the following actions would allow Bill to increase his gross profit margin this quarter, assuming he sells the same number of fence panels?
a.
Increase the price per panel.
b.
Decrease the price per panel.
c.
Spend more on labor and production.
d.
Spend less on labor and production.
A.) Increase the price per panel.
Last month, Korey’s Comics had a gross profit of \$2,385 with a monthly revenue of \$3,465. Korey expects similar sales this month, but he would like to build up his in-store browsing selection, and purchases an additional assortment of comic books that costs him \$625. The new assortment of comics will not arrive until next month. How does this transaction affect Korey’s gross profit for this month?
a.
This transaction will decrease Korey’s gross monthly profit by \$625.
b.
This transaction will increase Korey’s gross monthly profit by \$625.
c.
This transaction will decrease Korey’s gross monthly profit by \$1,760.
d.
This transaction will increase Korey’s gross monthly profit by \$1,760.
A.) This transaction will decrease Korey’s gross monthly profit by \$625.
Sam’s Swimming Pool Cleaning has a annual net income of \$46,900. Sam charges \$25 per week for each of his customers for 52 weeks. His annual operating expenses, including labor and supplies, are \$48,000. How many customers does Sam’s Swimming Pool Cleaning have?
a.
21
b.
38
c.
44
d.
73
D.) 73
Last month, Korey’s Comics had \$4,350 in net sales with a gross profit of \$3,320 and a net income of \$1,850. Calculate Korey’s gross profit margin.
a.
42.5%
b.
55.7%
c.
76.3%
d.
179.5%
C.) 76.3%
Which of the following statements best describes the difference between net income and gross profit?
a.
Gross profit considers operating expenses while net income does not.
b.
Net income considers operating expenses while gross profit does not.
c.
Gross profit deducts taxes while net income does not.
d.
Net income deducts taxes while gross profit does not.
B.) Net income considers operating expenses while gross profit does not.
Because of his business’s recent success, Sam has decided to expand his Sam’s Swimming Pool Cleaning to include another branch. This will add expenses for another office and payroll for five more employees, but Sam’s customer base will stay the same, at least for a while. Until Sam’s new branch starts bringing in new customers, how will this change affect Sam’s net profit margin?
a.
An added expense of a new branch has nothing to do with Sam’s net profit margin.
b.
Since the new branch is adding expenses, Sam’s net profit margin will go down.
c.
Since the new branch is adding expenses, Sam’s net profit margin will go up.
d.
Since the expense the new branch is adding is negligible, Sam should see no change in his net profit margin.
B.) Since the new branch is adding expenses, Sam’s net profit margin will go down.
Gross profit will always be _____ net income.
a.
equal to
b.
less than
c.
greater than
d.
unrelated to
C.) Greater than
Last year, Sam’s Swimming Pool Cleaning had a gross profit of \$105,355 and net income of \$72,010. Calculate Sam’s operating expenses for last year.
a.
\$3,335
b.
\$33,345
c.
\$17,734
d.
\$177,345
B.) \$33,345
Last year, Sally had a gross profit margin of 68% in her hair salon. Her gross profit was \$32,508.63. How much did Sally make in net sales last year?
a.
\$16,398.06
b.
\$22,105.87
c.
\$35,610.25
d.
\$47,806.81
D.) \$47,806.81
Jim had a very good quarter at his car lot with net sales reaching just over \$456,000. This created a net income of \$195,000. If Jim’s operating expenses last quarter were \$23,000, what was his gross profit margin?
a.
5.0%
b.
37.7%
c.
42.8%
d.
47.8%
D.) 47.8%
Below is last month’s business income statement for Korey’s Comics. Using the information provided in the statement, determine net income for Korey’s Comics last month.

Korey’s Comics

Revenue
Sales:
\$6,825

Returns:
\$215

Net Sales:

Cost of Goods Sold
Beginning Inventory:
\$780

Purchases:
\$1,795

Goods Available for Sale:

Ending Inventory:
\$795

Total Cost of Goods Sold:

Gross Profit::

Operating Expenses
Wages:
\$1,460

Rent:
\$650

Utilities:
\$185

\$90

Taxes:
\$125

Total Operating Expenses:

Net Income:
a.
\$2,320
b.
\$2,510
c.
\$4,830
d.
\$6,610

A.) \$2,320
Bill owns a company (Bill’s Gates) that manufactures fence panels. Bill’s Gates had a net profit margin last quarter of 18%. Which of the following actions will not help Bill increase his net profit margin this year, assuming he sells the same number of fence panels?
a.
Increase the price per panel.
b.
Use cheaper lumber to construct panels.
c.
Offer panels in a “buy one get one free” special.
d.
Reduce workforce and labor costs to construct panels.
C.) Offer panels in a “buy one get one free” special.
Which would NOT be included on an income statement for the Best Brand Company?

a.
Projected Profit
b.
Net Sales
c.
Cost of Goods
d.
Operating Expenses

A.) Projected Profit
Sam’s Swimming Pool Cleaning has an annual gross profit of \$88,400. Sam charges \$25 per week for each of his customers for 52 weeks. His annual operating expenses, including labor and supplies, are \$48,000. How many customers does Sam’s Swimming Pool Cleaning have?
a.
17
b.
35
c.
68
d.
105
C.) 68
Business at Korey’s Comics has been good, and Korey expects the same business next month. However, due to an increase in business, Korey has made the decision to bring on an extra hand to help run the store in the afternoons. The new employee will make \$435 per month. How does this change affect Korey’s monthly net income?
a.
Korey’s monthly net income will be \$435.
b.
Korey’s monthly net income will increase by \$435.
c.
Korey’s monthly net income will decrease by \$435.
d.
Korey’s monthly net income will not be affected by the change.
C.) Korey’s monthly net income will decrease by \$435.
A chicken farmer can produce one crate of eggs at a cost of \$9.86, and can sell that crate for \$34.24. If the farmer has a starting overhead cost of \$7,312, not including production costs, how many crates must be sold in order to realize a profit of \$11,300, to the nearest crate?
a.
164
b.
330
c.
463
d.
763
D.) 763
Bloro Appliances is pushing a new model of dishwasher. It costs Bloro \$71.22 to put each dishwasher on the sales floor, but they can sell the dishwashers for \$285.50 apiece. Bloro has three primary salespeople, each of whom earns a different commission per dishwasher sold. Their sales data for the past six months is shown below.

Salesperson
Sold
Commission/Sale
Rick
114
\$47.50
Carl
176
\$62.75
Lee
96
\$51.35

In order to stock the dishwashers, Bloro Appliances had to sign a contract which included costs of \$15,975. How much profit did Bloro Appliances gain from sales of these dishwashers over the past six months?
a.
\$72,839.40
b.
\$66,737.08
c.
\$61,320.68
d.
\$45,348.48

D.) \$45,348.48
Arderi Air Conditioning sells one primary model of air conditioner. Each unit of this model costs them \$61.25 to produce, but it sells for \$142.50 apiece. Arderi Air Conditioning employs three salespeople, each of whom earns a different commission per unit sold, as shown on the following table.
Salesperson
Commission/Sale
Mary
\$36.25
Jay
\$28.50
Abby
\$25.75

Last month, Arderi Air Conditioning had a total fixed overhead cost of \$7,622.25. It is known that one salesperson sold 51 units, one salesperson sold 43 units, and one salesperson sold 54 units. Which arrangement of sales would cause Arderi Air Conditioning to break even?
a.
Mary sells 54 units; Jay sells 51 units; Abby sells 43 units
b.
Mary sells 54 units; Jay sells 43 units; Abby sells 51 units
c.
Mary sells 43 units; Jay sells 51 units; Abby sells 54 units
d.
Mary sells 43 units; Jay sells 54 units; Abby sells 51 units

C.) Mary sells 43 units; Jay sells 51 units; Abby sells 54 units
Khybar Inc. manufactures dental x-ray machines. The company can sell an x-ray machine which cost \$508.17 to produce for \$1,295.75. Each of the company’s two salespeople earns a different commission per sale, as shown in the table below.

Salesperson
Commission/Sale
Greg
\$243.15
Colleen
\$288.75

Last year, Greg sold 11 fewer x-ray machines than Colleen did. Khybar Inc.’s total expenses last year, not counting production costs or commissions, came to \$79,558.59. If Khybar Inc. broke even, how many x-ray machines were sold last year in total?
a.
149
b.
153
c.
157
d.
160

B.) 153
Calvin works at a facility which processes apples. It costs the facility \$0.68 to make either a jar of applesauce or a bottle of apple juice. Due to the nature of the process and contractual agreements, Calvin’s facility must make and sell three jars of applesauce for every two bottles of apple juice. A jar of applesauce sells for \$2.20, and a bottle of apple juice sells for \$3.15. If the facility has annual overhead costs of \$368,500, not including production costs, how many bottles of apple juice will the facility have sold when it breaks even every year? Round to the nearest whole bottle, if necessary.
a.
38,789
b.
77,579
c.
116,368
d.
167,500
B.) 77,579
UNKNOWNNNNN!!!!!!!!!!!!!!!!!!!!!!!!!

Marcy’s company produces grandfather clocks. Each clock costs them \$164 to make, and they can sell a clock for \$625. If their annual overhead costs, not counting the cost to produce the clocks, comes to \$96,000, how many clocks must Marcy’s company sell each year to break even? Round to the nearest whole clock, if necessary.
a.
122
b.
154
c.
208
d.
293

C.) 208
The following graph represents the cost and revenue functions for custom-made computers. How many computers have been sold at the break-even point?

a.
12
b.
9
c.
5
d.
0

A.) 12
Which of the following expenses is not a fixed cost?
a.
equipment leases
b.
packaging costs
c.
insurance
d.
salary
B.) packaging costs
June has decided to take up quilting. She bought a sewing machine for \$135. It costs her \$11.75 in raw materials to make a quilt, and she can sell a quilt for \$28.50.

Which of the following graphs best illustrates June’s situation?

a.
I
b.
II
c.
III
d.
IV

A.) I
The following graph shows the relationship between cost and revenue for a manufacturer of radios. Which of the following pairs of equations best suits this graph?

Cost
I
Cost
II
Revenue
III
Revenue
IV
a.
I and III
b.
I and IV
c.
II and III
d.
II and IV

A.) I and III
KNOWNNNNNNN!!!!!!!!!!!!!!

Put the following items in order from most expensive to least expensive.

Item
Base Price
Change
Direction
Blender
\$29.73
9%
Markdown
Hat
\$14.16
77%
Markup
Ink
\$20.17
27%
Markup
Heater
\$28.46
22%
Markdown
a.
blender, heater, ink, hat
b.
blender, ink, hat, heater
c.
ink, hat, blender, heater
d.
ink, heater, blender, hat

B.) blender, ink, hat, heater
A sporting goods store is having a large sale event. Baseball bats are marked down by 42%, and hockey sticks are marked down by 29%. If baseball bats cost \$21.46 after the markdown and hockey sticks cost \$39.05 after the markdown, which item’s price was reduced by more, and by how many more dollars was it reduced? Round all dollar values to the nearest cent.
a.
Hockey sticks had their prices reduced by \$2.31 more than baseball bats.
b.
Hockey sticks had their prices reduced by \$0.41 more than baseball bats.
c.
Baseball bats had their prices reduced by \$4.22 more than hockey sticks.
d.
Baseball bats had their prices reduced by \$0.59 more than hockey sticks.
B.) Hockey sticks had their prices reduced by \$0.41 more than baseball bats.
A desk chair underwent the following changes in price before being removed from the store.

22%
Markup
30%
Markup
36%
Markdown
40%
Markup
18%
Markdown

If the final price of the desk chair was \$167.79, what was the original price, to the nearest dollar? Round all dollar values to the nearest cent.
a.
\$88
b.
\$122
c.
\$144
d.
\$196

C.) \$144
Greg purchased supplies for a party. He had a coupon good for 30% off. He purchased a helium tank rental with an original price of \$31.61, a sheet cake with an original price of \$18.44, a punch bowl with an original price of \$12.78, and paper decorations with an original price of \$23.69. Greg’s total came to \$80.99. To which item did Greg apply his coupon?
a.
cake
b.
helium tank rental
c.
paper decorations
d.
punch bowl
A.) Cake
An optical mouse originally cost \$31.85. Before it was removed from the store, it underwent the following changes in price.

27%
Markup
22%
Markup
25%
Markdown
39%
Markup
16%
Markdown

What is the final price of the optical mouse? Round all dollar values to the nearest cent.
a.
\$46.82
b.
\$43.21
c.
\$35.33
d.
\$26.75

B.) \$43.21
A plant nursery is having a sale. Potted begonias are marked down 27%, and tomato seedlings are marked down 35%. If you pay \$6.57 each for two potted begonias and \$2.60 each for three tomato seedlings, how much did you save?
a.
\$3.83
b.
\$5.31
c.
\$6.92
d.
\$9.06
D.) \$9.06
A microwave oven costs \$124.85 before it is marked down. If it is marked down by 63%, what is its new price, to the nearest cent?
a.
\$78.66
b.
\$61.85
c.
\$58.68
d.
\$46.19
D.) \$46.19
A store is selling a green rug for \$54.50 and a white rug for \$31.85. The green rug is marked down by 12%, and the white rug is marked up by 16%. After the markup and markdown, which rug is more expensive, and how much more expensive is it? Round all dollar values to the nearest cent.
a.
The white rug is \$1.09 more expensive than the green rug.
b.
The white rug is \$5.35 more expensive than the green rug.
c.
The green rug is \$1.44 more expensive than the white rug.
d.
The green rug is \$11.01 more expensive than the white rug.
D.) The green rug is \$11.01 more expensive than the white rug.
A roast chicken with a base price of \$6.89 is marked up by 21%. What is the new price, to the nearest cent?
a.
\$12.33
b.
\$9.97
c.
\$8.34
d.
\$7.10
C.) \$8.34
Ashley runs a hardware store. She has decided to apply a markdown of 15% to one item in order to draw customers into the store, and she will apply a markup of 10% to three different items, which she hopes the customers will purchase after purchasing the marked-down item. She has chosen four candidates for this process: a power drill with an initial price of \$51.49, a ceiling fan with an initial price of \$64.79, a miniature circular saw with an initial price of \$45.99, and a screwdriver set with an initial price of \$37.39. After applying the changes, the total cost of purchasing one of each item is \$3.77 more than it was before applying the changes. Which item was marked down?
a.
power drill
b.
ceiling fan
c.
circular saw
d.
screwdriver set
B.) Ceiling Fan
In order to clear out room for new merchandise, James decided to mark down some of the items for sale in his electronics store. He marked down DVD players by 36%, and he marked down stereo tuners by 22%. If DVD players cost \$41.60 after the markdown and stereo tuners cost \$69.42 after the markdown, which item’s price was reduced by more, and by how many dollars more was it reduced? Round all dollar values to the nearest cent.
a.
The DVD player’s price was reduced by \$3.82 more than the stereo tuner’s price.
b.
The DVD player’s price was reduced by \$27.82 more than the stereo tuner’s price.
c.
The stereo tuner’s price was reduced by \$0.29 more than the DVD player’s price.
d.
The stereo tuner’s price was reduced by \$27.53 more than the DVD player’s price.
A.) The DVD player’s price was reduced by \$3.82 more than the stereo tuner’s price.
A book with a base price of \$15.75 is marked up by 65%. What is the new price, to the nearest cent?
a.
\$25.99
b.
\$24.23
c.
\$21.26
d.
\$20.47
A.) \$25.99
A retailer marks up the price of a coffee mug from \$6.25 to \$8.77. By what percent did the price increase? Round to two decimal places.
a.
28.73%
b.
39.68%
c.
40.32%
d.
45.97%
C.) 40.32%
Richard’s store sells pineapples and grapefruits. Pineapples originally cost \$5.15 apiece, and grapefruits originally cost \$2.25 apiece. Richard reduced the prices to \$3.88 for a pineapple and \$1.56 for a grapefruit. Which fruit had its price reduced by a greater percent, and how many percentage points greater was that reduction than the other? Round to two decimal places. (Express your answer in percentage points; for example, 15% is 3 percentage points greater than 12%.)
a.
The price of pineapples experienced a reduction 5.99 percentage points greater than the price of grapefruits.
b.
The price of pineapples experienced a reduction 19.90 percentage points greater than the price of grapefruits.
c.
The price of grapefruits experienced a reduction 6.01 percentage points greater than the price of pineapples.
d.
The price of grapefruits experienced a reduction 11.50 percentage points greater than the price of pineapples.
C.) The price of grapefruits experienced a reduction 6.01 percentage points greater than the price of pineapples.
Craig runs a clothing store. He has decided to apply a markdown of 30% to one item in order to draw customers into the store, and he will apply a markup of 25% to three different items, which he hopes the customers will purchase after purchasing the marked-down item. He has chosen four candidates for this process: a leather jacket with an initial cost of \$112.75, a blazer with an initial cost of \$76.85, a pair of boots with an initial cost of \$134.50, and a wristwatch with an initial price of \$89.65. After applying the changes, the total cost of purchasing one of each item is \$29.46 more than it was before applying the changes. Which item was marked down?
a.
wristwatch
b.
leather jacket
c.
boots
d.
blazer
C.) Boots
Which of the following statements best describes the difference between markup and margin?
a.
Markup is a term used to describe profit while margin is a term used to describe loss.
b.
Markup is a term used to describe loss while margin is a term used to describe profit.
c.
Markup relates profit to selling price while margin relates profit to cost.
d.
Markup relates profit to cost while margin relates profit to selling price.
D.) Markup relates profit to cost while margin relates profit to selling price.
Winter is coming, so Sasha decides to buy new outdoor gear. She has a coupon good for 25% off. She buys a coat with an original price of \$85.75, a pair of boots with an original price of \$71.99, a scarf with an original price of \$24.25, and a pair of gloves with an original price of \$44.95. She pays a total of \$208.94. To which item did Sasha apply her coupon?
a.
coat
b.
boots
c.
scarf
d.
gloves
B.) Boots
Jan went grocery shopping and only bought items which had been marked down. The items she bought, along with their prices, can be seen below.

Item
Final Price
Markdown
Chicken
\$8.47
15%
Milk
\$2.16
20%
Onions
\$0.89
10%
Potato chips
\$1.45
12%
Oranges
\$1.36
25%
Flour
\$4.39
18%

Compared to if she had bought no items on sale, by what percent was Jan’s total grocery bill discounted? Round to two decimal places.
a.
15.85%
b.
16.50%
c.
16.65%
d.
17.50%

C.) 16.65%
A store marks down the price of a necklace from \$389.85 to \$314.15. By what percent did the price decrease? Round to two decimal places.
a.
13.21%
b.
15.75%
c.
19.42%
d.
24.10%
C.) 19.42%
A store is selling a black pair of shoes for \$79.45 and a brown pair of shoes for \$133.99. The black pair of shoes is marked up by 44%, and the brown pair of shoes is marked down by 21%. Which pair of shoes is more expensive, and how much more expensive is it? Round all dollar values to the nearest cent.
a.
The black pair costs \$6.82 more than the brown pair.
b.
The black pair costs \$8.56 more than the brown pair.
c.
The brown pair costs \$9.72 more than the black pair.
d.
The brown pair costs \$12.54 more than the black pair.
B.) The black pair costs \$8.56 more than the brown pair.
Korey is planning to open a comic book store. His store will cost \$12,500 to open and will come with a \$8,000 total annual operational cost. If his store makes \$12,000 in profit during the first year, and profits increase by 6% each year from then, how long will it take for Korey to see an overall profit in his business (where total profits exceed total expenses)? 2007-15-01-00-00_files/i0130000.jpg
a.
Korey will see an overall profit in his first year of business.
b.
Korey will see an overall profit in his second year of business.
c.
Korey will see an overall profit in his third year of business.
d.
Korey will see an overall profit in his fourth year of business.
C.) Korey will see an overall profit in his third year of business.
Korey is planning to open a comic book store near his home. After completing a population survey for 3,520 homes in a 5 mile radius, Korey created the chart below to include in the market analysis section of his business plan. Korey expects 75% of his business to come from kids in high school and grade school. About how many of homes surveyed fit into one of these two categories?

a.
493
b.
637
c.
1,126
d.
1,760

D.) 1,760
Korey is planning to open a comic book store. He has developed the following expense breakdown for set-up and operation for the first year. Korey has \$8,500 in savings and \$25,000 in inheritance money to use to open his store. Will Korey have enough to run his business for a full year?

Expense
Amount
Rent
\$10,800
Insurance
\$3,000
Store Fixtures
\$2,700
Computer and Cash Register
\$1,200
Inventory
\$17,400

a.
Yes, Korey will have \$1,600 to spare.
b.
No, Korey will be short \$1,600.
c.
Yes, Korey will have \$15,800 to spare.
d.
No, Korey will be short \$15,800.

B.) No, Korey will be short \$1,600.
Radwyn Horticulture is a company which focuses upon selling saplings. The company can grow a sapling for \$15.45, and can sell that sapling for \$36.50. There are three main salespeople at Radwyn Horticulture, each of whom earns a different commission per sapling sold, as shown in the table below.
Salesperson
Commission/Sale
Lara
\$8.15
Ian
\$11.25
Ari
\$8.90

Radwyn Horticulture’s fixed overhead expenses last month came to \$7,699.45. It is known that one salesperson sold 191 saplings, one salesperson sold 245 saplings, and one salesperson sold 221 saplings. Which arrangement of sales would cause Radwyn Horticulture to break even?
a.
Lara sells 221 saplings; Ian sells 191 saplings; Ari sells 245 saplings
b.
Lara sells 221 saplings; Ian sells 245 saplings, Ari sells 191 saplings
c.
Lara sells 191 saplings; Ian sells 221 saplings, Ari sells 245 saplings
d.
Lara sells 191 saplings; Ian sells 245 saplings, Ari sells 221 saplings

A.) Lara sells 221 saplings; Ian sells 191 saplings; Ari sells 245 saplings
Penny bought a juice squeezer for \$10. She can make a bottle of orange juice for a cost of \$0.75, and she sells her orange juice for \$1.85 per bottle.
Which of the following graphs best illustrates Penny’s situation?
a.
I
b.
II
c.
III
d.
IV
A.) I
In order to clear out room for new merchandise, James decided to mark down some of the items for sale in his electronics store. He marked down DVD players by 36%, and he marked down stereo tuners by 22%. If DVD players cost \$41.60 after the markdown and stereo tuners cost \$69.42 after the markdown, which item’s price was reduced by more, and by how many dollars more was it reduced? Round all dollar values to the nearest cent.
a.
The DVD player’s price was reduced by \$3.82 more than the stereo tuner’s price.
b.
The DVD player’s price was reduced by \$27.82 more than the stereo tuner’s price.
c.
The stereo tuner’s price was reduced by \$0.29 more than the DVD player’s price.
d.
The stereo tuner’s price was reduced by \$27.53 more than the DVD player’s price.
A.) The DVD player’s price was reduced by \$3.82 more than the stereo tuner’s price.
Put the following items in order from most expensive to least expensive.

Item
Base Price
Change
Direction
Toaster
\$23.35
36%
Markup
DVD
\$20.36
66%
Markup
\$69.09
56%
Markdown
Jeans
\$55.08
41%
Markdown
a.
b.
c.
d.

Which of the following expenses is not a variable cost?
a.
sales commission
b.
hourly wages
c.
rent
d.
materials
C.) Rent
A floor lamp originally cost \$44.50. Over a period of two months, it underwent the following changes in price.

62%
Markup
15%
Markdown
18%
Markup
20%
Markup
45%
Markdown

What is the final price of the floor lamp? Round all dollar values to the nearest cent.
a.
\$62.30
b.
\$47.72
c.
\$35.60
d.
\$24.48

B.) \$47.72
It costs a petroleum refinery \$0.39 to refine one gallon of gasoline, and \$0.39 to refine one gallon of natural gas. The refinery can sell gasoline for \$2.11 per gallon, and can sell natural gas for \$1.60 per gallon. Due to the refining process, the refinery must produce and sell twice as much natural gas as it does gasoline. If the refinery’s monthly overhead costs, not including production costs, are \$180,000, how many gallons of natural gas will the refinery have sold when it breaks even each month? Round to the nearest whole gallon, if necessary.
a.
86,957
b.
141,732
c.
148,760
d.
217,392
A.) 86,957
At his comic book store, Korey’s Comics, Korey sells approximately \$3,250 in comic books each month. But as a comic book dealer, Korey only pays \$1,285 for these comic books. Korey’s monthly operating expenses, including labor, are \$875.

Calculate Korey’s monthly net income.
a.
\$1,090
b.
\$1,965
c.
\$2,375
d.
\$2,840

B.) \$1,965
Because of his business’s recent success, Sam has decided to expand his Sam’s Swimming Pool Cleaning to include another branch. This will add expenses for another office and payroll for five more employees, but Sam’s customer base will stay the same, at least for a while. Until Sam’s new branch starts bringing in new customers, how will this change affect Sam’s gross profit margin?
a.
An added expense of a new branch has nothing to do with Sam’s gross profit margin.
b.
Since the new branch is adding expenses, Sam’s gross profit margin will go down.
c.
Since the new branch is adding expenses, Sam’s gross profit margin will go up.
d.
Since the expense the new branch is adding is negligible, Sam should see no change in his gross profit margin.
A.) An added expense of a new branch has nothing to do with Sam’s gross profit margin.
Gabrielle and her business partners are starting a new business that sells organic shampoo. After analyzing the market they have a projected sales forecast showing that they must sell 50,000 bottles of shampoo in 12 months to break-even. Calculating the variable unit cost and projected unit price gives a break-even volume of 45,000 bottles. Why should the projected unit price be changed based on the break-even volume?

a.
The break-even volume is too close to the forecasted unit sales.
b.
The break-even volume is much greater than the forecasted unit sales.
c.
The break-even volume is drastically lower than the forecasted unit sales.
d.
The break-even volume is not related to the forecasted unit sales

C.) The break-even volume is drastically lower than the forecasted unit sales.
Which of the following is not a recommendation the author of the Businesstown.com article makes to lower your break-even point?
a.
increase prices (4-5%)
b.
increase operational capital with a bank loan
c.
lower fixed expenses (phone, electric, advertising)
d.
lower direct costs (labor, purchasing, controlling, inventory)
B.) increase operational capital with a bank loan
In how many months did Sodresh Sundials either break even or turn a profit?
a.
eleven
b.
six
c.
four
d.
one
C.) Four
Faye, George, and Hannah are salespeople working at Lasht Cellular. It costs Lasht Cellular \$21.49 per… phone, which they sell for \$68.75. The three salespeople earn differing amounts of commission per phone. . .

If Lasht Cellular had fixed overhead costs of \$14,350 last month, how much profit did it gain last month?

a.
\$9,761.61
b.
\$15,943.66
c.
\$22,125.71
d.
\$23,536.70

A.) \$9,761.61
Dernea Gardening sells wheelbarrows. A wheelbarrow costs \$6.94 to produce and it sells for \$42.50. The company employs two salespeople, each of whom earns a different commission per wheelbarrow sold, as shown in the table below.

The company’s expenses last month, not counting production costs or commissions, totaled \$524.24. How much profit did Dernea Gardening make from the sales of wheelbarrows last month?
a.
\$3,570
b.
\$1,886
c.
\$1,684
d.
\$2,208

C.) \$1,684
How much coffee must her facility sell each month to break even, to the nearest hundred pounds?
A.) 120,700 pounds
The following graph displays the cost and revenue functions for Jake’s homemade wicker baskets. How many baskets must Jake sell to break even?
a.
10
b.
8
c.
4
d.
0
B.) 8
Based on the information provided in the graph, for which of the following situations could you expect to have the greatest increase in salary?
a.
Having a high school diploma and going to college for a year.
b.
Having an associate’s degree and getting a bachelor’s degree.
c.
Having a bachelors degree and getting a master’s degree.
d.
Having a master’s degree and getting a doctorate degree.
D.) Having a master’s degree and getting a doctorate degree.
Jamal works part-time earning \$8,000 per year. He reduces his work hours by half so that he can go to school. Jamal completes his degree after 3 semesters (1.5 years) at a cost of \$1,400 per semester in tuition and \$500 per semester in books. What was Jamal’s investment in getting his degree?
a.
\$4,700
b.
\$5,700
c.
\$11,700
d.
\$17,700
C.) \$11,700
Two people quit work and begin college at the same time. Their salary and education information is given in the table below.

Salary prior to school
Years attending college
Total cost of college
Person A
\$18,000
3
\$45000
\$33,000
Person B
\$27,000
4
\$30,000
\$37,000

Choose the true statement.
a.
Person A recovers their investment in a shorter amount of time.
b.
Person B recovers their investment in a shorter amount of time.
c.
They recover their investments in the same amount of time.
d.
There is too little information to compare the time to recover their investments.

A.) Person A recovers their investment in a shorter amount of time.
You give up a full-time salary of \$45,000 a year to go to school for 2 years. The total cost of going to school is \$30,000. If you want to be able to recover your investment in 5 years or less, what is the minimum salary you would need to earn upon earning your degree?
a.
\$51,000
b.
\$60,000
c.
\$69,000
d.
\$75,000
C.) \$69,000
Niah works as a retail sales clerk earning \$18,000 per year. She plans to go to school for medical billing that has a median salary of \$35,000. The cost of her education will be \$20,000. If Niah does not work for the 2 years that she is in school, about how long will it take her to recover her investment if she gets a medical billing job making the median salary when she graduates?
a.
less than 1 year
b.
1.2 years
c.
1.6 years
d.
3.3 years
D.) 3.3 years
Aaron is a high school graduate working as a retail clerk. He earns a median salary for a high school graduate. Aaron is thinking about going to college to get an associate’s degree. If he completes his degree in 2 years and college costs total \$30,000, how long will it take Aaron to recover his investment, assuming that he earns the median salary and continues to work full time while he is attending school?
a.
b.
c.
d.
Yvonne continues to work full-time at her job while she attends college part-time. It takes 5 years for Yvonne to complete the program, but when she does she is able to increase her salary from \$37,000 per year to \$45,000 per year. At this rate, Yvonne will have recovered her college costs after 4.5 years. How much did it cost Yvonne to go to college?
a.
\$36,000
b.
\$45,000
c.
\$40,000
d.
\$32,000
A.) \$36,000
Data seems to indicate that there is a negative correlation between years of education and unemployment rates. Which of the following describes what this means?
a.
As education increases unemployment increases.
b.
As education increases unemployment decreases.
c.
As education decreases unemployment decreases.
d.
None of the above.
B.) As education increases unemployment decreases
If there is a positive correlation between number of years of education and the amount of company pension contributions, which of the following professions would you expect to have the best company pension contributions?
a.
police officer, associates degree
b.
accountant, bachelor’s degree
c.
lawyer, master’s degree
d.
pharmacist, docotorate degree
D.) pharmacist, docotorate degree
Mark currently works part-time with a salary of \$8,000 per year. Mark plans to quit working and attend college for 4 years. If his college costs will total \$64,000, how long will it take Mark to recover his investment assuming he has a salary of \$32,000 upon graduating?
a.
2 years
b.
3 years
c.
4 years
d.
5 years
C.) 4 years
How many years will it take James to recover his investment?
C.) 10 years
Which of the following is not a factor of a career that might affect your long-term goals?
A.) The job tends to offer a generous number of sick or personal days per year.
If his college costs will total \$64,000, how long will it take Mark to recover his investment assuming he has a salary of \$32,000 upon graduating?
C.) 4 years
Based on the information provided, the unemployment rate decreases the most when moving between which two consecutive education levels?
A.) “Less than high school” and “High School Graduate”
Two people quit work and begin college at the same time. Their salary and education information is given in the table below. Choose the true statement.
A.) Person A recovers their investment in a shorter amount of time.
If there is a positive correlation between salary and education, then based on the table shown, which of the following careers requires the least education?
D.) Surveyor
Kevin works for a company which produces printers. A printer sells for \$163.95 and costs \$48.28 to produce. In one month, Kevin’s company sold 427 printers, earning a profit of 22,599.09. How great were the company’s non-production overhead expenses, to the nearest dollar?
a.
\$13,410
b.
\$20,616
c.
\$24,809
d.
\$26,792
D.) \$26,792
A furniture manufacturer must pay \$16.91 to make a certain kind of chair, which it can sell for \$55.75. If the manufacturer has starting overhead costs of \$18,340, not including production costs, how many chairs must it sell to realize a profit of \$24,850, to the nearest chair?
a.
1,112
b.
918
c.
775
d.
640
A.) 1,112
The following graph shows the relationship between cost and revenue for a manufacturer of lab coats.

2007-15-03-00-00_files/i0200000.jpg

Which of the following pairs of equations best suits this graph?
IV
a.
I and III
b.
I and IV
c.
II and III
d.
II and IV

B.) I and IV
It costs a publishing company \$0.55 to print one copy of a certain novel. This company paid \$725,000 for the rights to the novel. If they can sell a copy of the novel for \$6.75, how many copies of the novel must they sell to break even, to the nearest hundred?
a.
195,300
b.
116,900
c.
107,400
d.
99,300
B.) 116,900
At the beginning of January, Kesia Records paid \$148,950 to acquire the exclusive rights to a new album. It costs them \$1.13 to print a copy of this album, which they can sell for \$9.75. The following chart shows the sales of that record, along with the overhead expenses of running a record studio, not counting production costs.

Month
Albums Sold
Expenses
Jan.
5,486
\$27,714
Feb.
8,191
\$21,689
Mar.
4,796
\$25,195
Apr.
7,490
\$28,766
May
6,272
\$24,604
Jun.
5,131
\$29,040

In whch month did Kesia Records first break even?
a.
January
b.
March
c.
April
d.
May

D.) May

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