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\begin{tabular}{l} 1) Lauren runs a chili restaurant in San Francisco. Her total revenue \\ last year equaled \( \$ 111,000 \). The rent on her restaurant totaled \\ \( \$ 48,000 \). Her labor costs totaled \( \$ 43,000 \). Her materials, food and \\ other variable costs totaled \( \$ 19,000 \). An accountant calculates \\ Lauren's profit as _- \\ OA) incurred a loss of \( \$ 1,000 \). \\ \hline OB) earned a profit of \( \$ 1,000 \). \\ \hline OC) incurred a loss of \( \$ 111,000 \). \\ \hline OD) earned a profit of \( \$ 111,000 \). \\ \hline\end{tabular}

Ask by Lawson Dunn. in the United States
Mar 15,2025

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Answer

Lauren earned a profit of \$1,000.

Solution

To determine Lauren's profit, we need to calculate her total costs and then subtract that from her total revenue. 1. **Known Conditions:** - Total Revenue (R) = \$111,000 - Rent (R_r) = \$48,000 - Labor Costs (C_l) = \$43,000 - Variable Costs (C_v) = \$19,000 2. **Calculate Total Costs (C):** \[ C = R_r + C_l + C_v \] Substituting the known values: \[ C = 48000 + 43000 + 19000 \] Let's calculate this step by step: - First, add the rent and labor costs: \[ 48000 + 43000 = 91000 \] - Now, add the variable costs: \[ 91000 + 19000 = 110000 \] So, the total costs (C) are: \[ C = 110000 \] 3. **Calculate Profit (P):** \[ P = R - C \] Substituting the values: \[ P = 111000 - 110000 \] Performing the subtraction: \[ P = 1000 \] 4. **Conclusion:** Lauren earned a profit of \$1,000. Thus, the correct answer is: **OB) earned a profit of \( \$ 1,000 \).**

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The Deep Dive

Lauren's total expenses amount to \( \$ 48,000 + \$ 43,000 + \$ 19,000 = \$ 110,000 \). To find her profit, subtract the total expenses from the total revenue: \( \$ 111,000 - \$ 110,000 = \$ 1,000 \). So, her profit is \( \$ 1,000 \). In real-world business scenarios, understanding your profit is crucial for sustainability. Many small businesses face similar calculations, and having a clear grasp on costs versus revenue can help you make informed decisions. If Lauren had focused on managing her variable costs a bit better or optimized her labor expenses, she might have increased her profit margin even more!

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