A business spends 40% of its revenue on salaries, 30% on operational costs, and the remaining on profit. If the revenue is R500,000, calculate the amount allocated to each category.
Answer (2)
The business allocates R200,000 for salaries, R150,000 for operational costs, and R150,000 for profit from a total revenue of R500,000.
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Calculate the amount spent on salaries: 0.40 × R 500 , 000 = R 200 , 000 .
Calculate the amount spent on operational costs: 0.30 × R 500 , 000 = R 150 , 000 .
Calculate the profit: R 500 , 000 − R 200 , 000 − R 150 , 000 = R 150 , 000 .
The amounts allocated are: Salaries: R 200 , 000 , Operational Costs: R 150 , 000 , Profit: R 150 , 000 .
Explanation
Understanding the Problem We are given that a business allocates its revenue to salaries, operational costs, and profit. The percentages for salaries and operational costs are provided, along with the total revenue. Our goal is to calculate the amount allocated to each of these categories.
Calculating Salaries First, we calculate the amount spent on salaries. The business spends 40% of its revenue on salaries, and the total revenue is R500,000. Therefore, the amount spent on salaries is: 0.40 × R 500 , 000 = R 200 , 000
Calculating Operational Costs Next, we calculate the amount spent on operational costs. The business spends 30% of its revenue on operational costs, and the total revenue is R500,000. Therefore, the amount spent on operational costs is: 0.30 × R 500 , 000 = R 150 , 000
Calculating Profit Finally, we calculate the profit. The profit is the remaining revenue after deducting the amounts spent on salaries and operational costs. Therefore, the profit is: R 500 , 000 − R 200 , 000 − R 150 , 000 = R 150 , 000
Final Answer In conclusion, the business allocates R200,000 to salaries, R150,000 to operational costs, and R150,000 to profit.
Examples
Understanding how a business allocates its revenue is crucial for financial planning and stability. For instance, if a local bakery has a monthly revenue of R20,000, and they allocate 40% to ingredients, 30% to staff, and the rest to profit, they can calculate these amounts to manage their budget effectively. This means they spend R8,000 on ingredients, R6,000 on staff, and have R6,000 left as profit. This breakdown helps them make informed decisions about pricing, cost-cutting, or investments to improve their financial health.
