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Hello!
My question is: why did they compute the revenue figure this way?
Food (15000)*(360) (8)*(0.3) (1.03) * (1.03)
I do understand the concept that 15000 are the number of visitors, 360 days per year, and the twice 1.03 refer to the inflation in Year 2.
But I don’t understand the 8 * 0.3 part.
The profit (we are told) is 30%. Now is it profit of cost or revenue?
And is $8 the cost of food for the visitors and revenue for us (the company)?
I hope you understood my query, and please guide me for it.
Thank you.
The question says that the average visitor spends $8 on food.
Therefore it is the cost to the visitor and therefore revenue for the company.It also says ‘$8 on food and drinks of which 30% is profit’. The profit to the company is therefore 30% x $8, and it is the profit that is relevant for our calculations – the revenue less the costs.
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