courses › Business Math

Work out Greenline's profit, three possible moves, and a cash squeeze, one case card at a time.

Pen and paper is fine · no calculator needed why?

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Opens at level 40.

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Builds on: Break-Even (not open yet) · Pricing Decisions (not open yet) · Profit Is Not Cash (not open yet)

skills · practice stats

From rounds of this course only: box, review and trial answers are left out. Once a skill has 40 tries, it compares your first 20 tries with your last 20.

• Base month operating profit par 30 s not tried yet

  worked example

  Brightside Cleaning (a made-up office cleaning business), one month: 54 customers each pay $350; each customer costs $140 in variable costs; fixed expenses are $15,000. What is monthly operating profit? (Use a minus sign for a loss.)

  Answer: -$3,660.00

  1. Revenue 54 × $350 = $18,900; variable costs 54 × $140 = $7,560.
  2. Contribution $18,900 − $7,560 = $11,340; minus fixed $15,000 = −$3,660.

• Scenario: raise the price par 40 s not tried yet

  worked example

  Fernhill Pest Control (a made-up pest control service): 48 customers at $350 a month, $160 variable cost per customer, $4,500 fixed. Scenario: price rises to $375 and 41 customers stay; costs don't change. What is operating profit in this scenario?

  Answer: $4,315.00

  1. 41 × ($375 − $160) = 41 × $215 = $8,815; minus $4,500 fixed = $4,315, versus $4,620 now.
  2. It depends on how many customers really stay.

• Scenario: discount to grow par 40 s not tried yet

  worked example

  Northstar IT Support (a made-up IT support business): 54 customers at $700 a month, $270 variable cost per customer, $3,000 fixed, room for 65 customers. Scenario: price falls to $650 and customers grow to 62; costs don't change. What is operating profit in this scenario?

  Answer: $20,560.00

  1. 62 × ($650 − $270) = 62 × $380 = $23,560; minus $3,000 fixed = $20,560.
  2. Revenue goes from $37,800 to $40,300; profit goes from $20,220 to $20,560.

• Scenario: hire and grow par 45 s not tried yet

  worked example

  Greenline (a made-up office-plant care business): 40 customers at $500 a month, $200 variable cost per customer, $6,000 fixed. Scenario: hire a coordinator for $4,000 a month and grow to 50 customers at the same price; variable cost per customer doesn't change. What is operating profit in this scenario?

  Answer: $5,000.00

  1. 50 × $300 = $15,000; fixed becomes $6,000 + $4,000 = $10,000; profit = $5,000, versus $6,000 now.

• Cash stress test par 40 s not tried yet

  worked example

  Fernhill Pest Control (a made-up pest control service): 36 customers at $650 a month, $270 variable cost per customer, $9,500 fixed. Opening cash is $11,000. This month Fernhill Pest Control collects only $11,900 of its $23,400 revenue and pays all $19,220 of its costs. What is ending cash?

  Answer: $3,680.00

  1. $11,000 + $11,900 − $19,220 = $3,680.
  2. Operating profit is still $4,180; the other $11,500 of revenue sits in receivables until customers pay.

rest ladder

Win 3 of your last 4 rounds and the course rests. A win is 90% right, within 2× the round's par. Pass the review when it comes back and the next rest is longer.

1. 1 day
2. 3 days
3. 7 days
4. 14 days
5. 30 days
6. 60 days
7. mastered · every 90 days

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