Answered

At the end of the first month, the business you started managed to make R495,000. Use the following information to calculate your business expenses and your net profit.




Operational expenses		Amounts


\begin{tabular}[t]{l}
\begin{itemize}
\item[a.] Salaries: Foreman 1
Foreman 2
Worker 1
Worker 2
\item[b.] Advertising
\item[c.] Stock and equipment
\item[d.] Deliveries
\item[e.] Total operational expenses (a + b+ c + d)
\end{itemize}
&


$\begin{array}{l}
\text { R25,000 }

\text { R25,000 }

\text { R15,000 }

\text { R15,000 }
\end{array}$

R10,000

R90,000

R65,000

R \_\_\_\_ (4 marks)
\\

\hline Administration costs & \\

\hline

\begin{itemize}

\item[f.] Salaries: Administrator

\item[g.] Supplies and miscellaneous

\item[h.] Insurance

\item[i.] Total administrative costs (f + g + h)

\end{itemize} &


R30,000

R12,000

R3,000

R \_\_\_\_ (2 marks)
\\

\hline General costs & \\

\hline

\begin{itemize}

\item[j.] Rent

\item[k.] Miscellaneous (fuel, electricity etc.)

\item[l.] Total general costs (j+k)

\end{itemize} &


$\text { R50,000 }$

R \_\_\_\_ (2 marks)
\\

\hline & \\

\hline Total expenses & R \_\_\_\_ (2 marks) \\

\hline Net profit & R \_\_\_\_ (2 marks) \\

\hline & \\

\hline

\end{tabular}

Verified Answer :

  • Calculate operational expenses by summing salaries, advertising, stock, and deliveries: R\(245,000\).
  • Calculate administrative costs by summing administrator salary, supplies, and insurance: R\(45,000\).
  • Calculate general costs by summing rent and miscellaneous: R\(50,000\).
  • Determine total expenses: R\(340,000\) and subtract from income to find the final net profit: \(\boxed{\text{R}155,000}\).

Explanation

  1. Analysis of Financial Data

The objective is to calculate the total operational expenses, total administrative costs, total general costs, total expenses, and the net profit for a business that earned R495,000 in its first month. We are provided with detailed breakdowns for each expense category. For general costs, the miscellaneous component is not specified, so we will proceed by summing the known values (assuming the miscellaneous value is R0).

  1. Calculating Operational Expenses

The operational expenses consist of salaries for two foremen (R25,000 each), two workers (R15,000 each), advertising (R10,000), stock and equipment (R90,000), and deliveries (R65,000). The total operational expense is calculated as:
\[25,000 + 25,000 + 15,000 + 15,000 + 10,000 + 90,000 + 65,000 = \text{R}245,000\]
The total operational expenses (e) are \(\boxed{\text{R}245,000}\).

  1. Calculating Administrative Costs

The administrative costs include an administrator's salary (R30,000), supplies and miscellaneous items (R12,000), and insurance (R3,000). The total administrative cost is:
\[30,000 + 12,000 + 3,000 = \text{R}45,000\]
The total administrative costs (i) are \(\boxed{\text{R}45,000}\).

  1. Calculating General Costs

The general costs include rent (R50,000). As no specific value was provided for miscellaneous expenses (fuel, electricity, etc.), we take this as R0. Thus, the total general cost (l) is:
\[50,000 + 0 = \text{R}50,000\]
The total general costs (l) are \(\boxed{\text{R}50,000}\).

  1. Total Expenses and Net Profit Calculation

To find the total expenses, we sum the totals from all three categories:
\[\text{Total expenses} = 245,000 + 45,000 + 50,000 = \text{R}340,000\]
The net profit is calculated by subtracting the total expenses from the total income:
\[\text{Net profit} = 495,000 - 340,000 = \text{R}155,000\]
The total expenses are \(\boxed{\text{R}340,000}\) and the net profit is \(\boxed{\text{R}155,000}\).

Examples

Understanding business expenses is crucial for effective resource management. For example, if a small bakery tracks its daily costs like ingredients, staff wages, and electricity, it can accurately calculate its net profit at the end of each month. This helps the business owner make informed decisions about whether to increase prices, reduce waste, or expand operations. By categorizing costs into operational, administrative, and general expenses, a business can easily identify which areas are consuming the most resources and where they might save money.

Related Questions