if a coffee stand next door to the news stand and new condos has a fixed cost of $300?

Question

The margin is .40. The coffee stand gets appx about 25% of the people from the news stand and the condos combined. In the end 25% spends about $8. How would one set up that as an equation

Answer 1

Since no variable costs are specified, one must assume all costs are fixed and the total cost of the operation is $300.

If the profit margin is 40% (.4) and each customer spends $8, then the amount of the cost allocated to the purchase of each customer is (1-.4) x $8 = $4.80. The number of customers per unit time is $300/$4.80= 62.5. The number of people from the new-stand and the condos combined is 62.5/.25 = 250.

It is not clear which number you are trying to estimate.

Answer 2

you have not stated the problem fully or properly...

but this is the method to do it...

we assume $300 is the fixed cost per month...

there are 2 unknowns

let s be the sales per day at the coffee stand; so in an average month of 30 days, it will sell 30s coffees

let n be the number of customers to the newsstand+condos

so n/4 (25%) people come to coffee stand; ... do they spend 8$? or 25% of them??

....
try now