Operator II: Make the Call
Limits, thresholds, reserves, equity, and which move the numbers actually support.
Pen and paper is fine · no calculator needed why?
Opens at level 46.
Lesson and untimed practice
Read the full lesson and try each skill without a clock. About 3 minutes to read.
skills · practice stats
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How many customers can you lose? not tried yet
worked example
Fernhill Pest Control (a made-up pest control service): 25 customers at $700 a month, $270 variable cost per customer. If the price rises to $800, what is the largest whole number of customers Fernhill Pest Control can lose and still keep at least its current total contribution?
Answer: 4
- Current contribution 25 × $430 = $10,750; each customer would contribute $800 − $270 = $530.
- $10,750 ÷ $530 ≈ 20.28, so keep 21 and lose at most 4. That's a limit, not a prediction of who leaves.
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Customers the hire needs not tried yet
worked example
Fernhill Pest Control (a made-up pest control service): 56 customers at $400 a month, $150 variable cost per customer, $10,000 fixed. A coordinator would add $2,000 a month of fixed cost. How many total customers does Fernhill Pest Control need to earn at least its current profit?
Answer: 64
- Extra customers = $2,000 ÷ $250 = 8; 56 + 8 = 64.
- At 64 customers profit is $4,000; at 63 it would be $3,750, below the current $4,000.
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Does cash break the reserve? not tried yet
worked example
Fernhill Pest Control (a made-up pest control service): 29 customers at $800 a month, $390 variable cost per customer, $11,000 fixed. Opening cash $7,000. Fernhill Pest Control collects only $20,200 of revenue this month and pays all $22,310 of costs. Its policy is to keep at least $6,000 in cash. What is ending cash minus the reserve? (Use a minus sign if it's short.)
Answer: -$1,110.00
- Ending cash = $7,000 + $20,200 − $22,310 = $4,890; minus the $6,000 reserve = −$1,110.
- Operating profit for the month is $890, but profit isn't cash.
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Ending equity not tried yet
worked example
Fernhill Pest Control (a made-up pest control service): 27 customers at $700 a month, $240 variable cost per customer, $5,000 fixed. Fernhill Pest Control opens the month with $19,000 of cash and $19,000 of equity, nothing else. It collects only $13,400 of its $18,900 revenue, pays all costs, and makes no distributions. Using accrual accounting, what is ending equity?
Answer: $26,420.00
- Equity grows by the month's profit, and there are no distributions: $19,000 + $7,420 = $26,420.
- Cash is only $20,920 because $5,500 is still owed by customers; cash plus that receivable equals equity.
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Which claim do the numbers support? not tried yet
worked example
Northstar IT Support (a made-up IT support business): 37 customers at $800 a month, $320 variable cost each, $8,000 fixed. Scenario 1: price $900, 32 customers stay. Scenario 2: price $750, 45 customers. Scenario 3: hire a coordinator for $5,000 a month and grow to 50 customers at $800. Costs don't change except as stated. Which claim do the numbers support?
- Scenario 3 earns the most profit because its revenue is highest
- Scenario 1 earns the most profit because it charges the highest price
- Scenario 2 earns the most operating profit, if customers really grow to 45
- All three earn the same profit
Answer: Scenario 2 earns the most operating profit, if customers really grow to 45
- Profits: now $9,760, Scenario 1 $10,560, Scenario 2 $11,350, Scenario 3 $11,000.
- Highest revenue isn't highest profit: Scenario 3 brings in the most ($40,000).
- A careful operator would check that demand really grows before cutting prices.
rest ladder
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- mastered · every 90 days