Lesson 8.2.3

1. Lesson 8.2.3 Profit

2. Lesson 1.1.1 Lesson 8.2.3 Profit California Standards: Number Sense 1.3 Convert fractions to decimals and percents and use these representations in estimations, computations, and applications. Number Sense 1.7 Solve problems that involve discounts, markups, commissions, and profit and compute simple and compound interest. What it means for you: You’ll learn what profit is and how to find profit as a percent of a company’s sales. • Key words: • profit • revenue • expenses • percent • sales

3. Lesson 1.1.1 Lesson 8.2.3 Profit If you buy something and then sell it for more than the amount that it cost you, the extra money that you get is called profit. Because you end up with more money than you started with, you can think about profit as a percent increase.

4. Lesson 1.1.1 Lesson 8.2.3 Profit Profit is the Amount of Money that a Business Makes A business has to spend money buying stock and paying staff. The amount of money that a business spends is called its expenses. A business also has an income from selling its products or services. The total amount of money that a business brings in is called its revenue.

5. Lesson 1.1.1 Lesson 8.2.3 Profit Profit is the Amount of Money that a Business Makes The profitthat a business makes is just the difference between its revenue and its expenses. Profit = Revenue – Expenses

6. Lesson 8.2.3 Profit Example 1 A film had a revenue of $55 million in ticket sales and $35 million in licensing agreements. It had expenses of $4 million in advertising and $48 million in production costs. What profit did the film make? Solution The film’s total revenue= $55,000,000 + $35,000,000 = $90,000,000 The film’s total expenses= $4,000,000 + $48,000,000 = $52,000,000 Profit = Revenue – Expenses = $90,000,000 – $52,000,000 = $38,000,000 Solution follows…

7. Lesson 1.1.1 Lesson 8.2.3 Profit Guided Practice 1. Janet buys a rare baseball card for $15. She later sells it to another collector for $18. What profit has she made? 2. This year a company had a revenue of $500,000 and $356,000 of expenses. What profit did the company make this year? 3. A school held a fund-raiser. They paid $200 to hire a band, and $400 for food. They took $1000 in ticket sales. How much profit did the event make? 4. A bookstore’s total expenses in one year consisted of $300,000 to buy stock, and $150,000 to pay staff and cover other expenses. Their profit was $40,000. What was their total revenue? $3 $144,000 $400 $490,000 Solution follows…

8. Lesson 1.1.1 Lesson 8.2.3 Profit Profits are Often Given as Percents You can also work out a percent profit. This compares the amount of profitto the amount of sales revenue.

9. $90,000 $720,000 Lesson 8.2.3 Profit Example 2 A company makes a profit of $90,000 on total sales of $720,000. What is their profit as a percent of sales? Solution The company made $90,000 profiton sales of $720,000. Write this as a fraction, and convert it to a decimal. = 0.125 Now change the decimal to a percentby multiplying by 100. 0.125 × 100 = 12.5, so their profit is 12.5% of their sales. Solution follows…

10. Lesson 1.1.1 Lesson 8.2.3 Profit Guided Practice 5. Sayon’s lemonade stand made a $20 profit. He sold $80 worth of lemonade. What profit did he make as a percent of sales? 6. A company made a profit of $6000 on total sales of $40,000. What was their profit as a percent of sales? 7. Sophia buys a set of books for $75. She later sells the books to a collector for $90. What percent profit has she made? 8. Company A made a 12% profit on sales of $295,000. How much profit did they make? 20 ÷ 80 = 0.25 =25% 6000 ÷ 40,000 = 0.15 = 15% (90 – 75) ÷ 90 = 0.166 » 17% 295,000 × 12% = $35,400 Solution follows…

11. Lesson 1.1.1 Lesson 8.2.3 Profit You Can Compare Profits Using Percents Businesses often use percentsto comparethe profitsthat they have made in consecutive years. This shows how the company is performing over time.

12. 5 5 100 100 Lesson 8.2.3 Profit Example 3 This year, Company B increased its profits by 5% over the previous year. If last year’s profit was $43,900, what was this year’s profit? Solution Write the percent of the increaseas a fraction: 5% = Work out the amountof the increase: × $43,900 = 0.05 × $43,900 = $2195 Now addthe amount of the increase to the original profit: $43,900 + $2195 = $46,095 Solution follows…

13. $12,000 = 0.3 $40,000 Lesson 8.2.3 Profit Example 4 Last year, Company C made profits of $40,000. This year, they made profits of $28,000. What was the percent decrease in their profits? Solution Find the amountof the profit decrease: $40,000 – $28,000 = $12,000 Now dividethe amount of the decrease by the first year’s profits: Change the decimalto a percentby multiplying by 100: 0.3 × 100 =30, so they had a 30% decrease in profit. Solution follows…

14. Lesson 1.1.1 Lesson 8.2.3 Profit Guided Practice 9. This year, Company D increased its profits by 10% over last year. If last year’s profits were $12,000, what was this year’s profit? 10. Company E’s profits fell by 4% this year compared to last year. If last year’s profits were $29,500, what were this year’s profits? 11. Last month, Company F made profits of $1250. This month, they made profits of $1500. Find the percent increase in their profits. 12. Last year, Company G made profits of $200,000. This year, they made profits of $192,000. Find the percent decrease in their profits. 10% × 12,000 = 120012,000 + 1200 = $13,200 4% × 25,500 = 118029,500 – 1180 = $28,320 (1500 – 1250) ÷ 1250 = 20% (200,000 – 192,000) ÷ 200,000 = 4% Solution follows…

15. Lesson 8.2.3 Profit Independent Practice 1. In one year, a company has a total revenue of $185,000 and total expenses of $155,000. What were the company’s profits that year? 2. A website selling clothes made a profit of $7890 in a month. In the same month its revenue was $12,390. Find its expenses for that month. 3. A toy store makes $12,000 profit on sales of $300,000. What percent profit has the store made? 4. A grocer buys $270 of fruit. He sells it for $283.50. What is his profit? What is his percent profit? $30,000 $4500 4% $13.50, 5% Solution follows…

16. Lesson 8.2.3 Profit Independent Practice 5. This year, Company H’s profits fell by 7% compared to the previous year. If last year’s profit was $22,500, what was this year’s profit? 6. Last month, a store made profits of $4800. This month, they made profits of $5400. What was the percent increase in their profits? 7. Your class organizes a dance as a fund-raiser. You spend $100 hiring a DJ, $180 on food, and $40 on tickets and fliers. You have 50 tickets — if they all sell, what will you need to price them at to make a 25% profit? $20,925 12.5% $8 Solution follows…

17. Lesson 8.2.3 Profit Round Up Profit is the money that a business is left with when you take away what it spends from what it takes in sales. Percent change in profit is a way of measuring the performance of a business over time.