Competency-Based
Competitive Events
*Written Exam*
Test Number 1025
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Math Applications in Business
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Test 1025
MATH APPLICATIONS IN BUSINESS
1
1. Jack traded in his old car for a new one with better gas mileage during the federal government's “Cash
for Clunkers” program. The car dealer received a $4,500 rebate for the used car that was passed on to
Jack.. He paid 20% down on the car's $23,670 cost with tax and title. How much would Jack still owe on
the car before interest is added?
A. $18,963
C. $14,436
B. $16,637
D. $12,793
2. Greg, Jason, and Brandon own a restaurant together. When the three partners started their business five
years ago, Greg invested $79,000 in the business, Jason invested $143,000, and Brandon invested
$24,000. Two years ago, Brandon invested an additional $30,000 in the business. If they agreed to share
the restaurant's net income in proportion to their investments, what is Jason's share of this year's
$94,000 net income?
A. $54,614
C. $26,884
B. $18,424
D. $48,692
3. The Built Right Construction Company's total wages for the first quarter were $348,502. Eight-five
percent of those wages is subject to a state unemployment tax of 5.8%. How much state unemployment
tax does Built Right owe?
A. $18,201.51
C. $19,290.66
B. $17,181.15
D. $20,213.12
4. Two years ago, Julianna purchased 40 shares of LMNOP stock at a price of $67.21 per share and 25
shares of QRS stock at $52.66 per share. This year, she sold all of the stock. She sold the LMNOP stock
at $92.56 per share and the QRS stock at $36.89 per share. Her long-term capital gains tax rate is 15%.
If Julianna uses her entire capital loss this tax year, how much tax is she required to pay on her net
capital gain?
A. $152.10
C. $101.40
B. $59.14
D. $92.96
5. It costs the PlayTime toy company $24 to manufacture a pair of roller blades. PlayTime uses an 80%
markup based on the cost. How much does PlayTime charge distributors for one pair of roller blades?
A. $46.80
C. $43.20
B. $44.00
D. $48.00
6. Kylie is a store employee who is giving directions to the store's branch location to a customer. She tells
the customer to travel north for 1.25 miles onto Elm Street and turn right on State Street. Then, drive 2.25
miles on State Street and turn right onto Corbin Avenue. Travel two miles on Corbin Avenue and stay in
the left lane, and merge onto Andrews Parkway. Drive 6.25 miles on Andrews Parkway. Turn left at 3277
Andrews Parkway, which is next door to a Chevron gas station. Calculate the number of feet from the
store to the branch location if one mile is equal to 5,280 feet.
A. 62,040
C. 64,240
B. 60,440
D. 62,400
7. It costs $0.28 to mail a postcard and $0.44 to mail a business letter in a standard size envelope. How
much will it cost for Mandy to send 387 postcards and 423 letters?
A. $288.72
C. $294.48
B. $226.80
D. $356.40
8. A project manager is developing the agenda for a project-team meeting. There are nine members of the
project team. Each member is scheduled to present a status report that will last 10 minutes. A vendor will
make a 15-minute presentation after the status reports have been presented. The project manager
estimates that another 30 minutes will be needed to answer questions about the vendor's presentation.
How many hours will the meeting last?
A. 1.5
C. 2.25
B. 2
D. 1.75
Copyright © 2010 by MBA Research and Curriculum Center®, Columbus, Ohio
Test 1025
MATH APPLICATIONS IN BUSINESS
2
9. Brody's Carpet Store recently changed its installation policy by increasing the installation charge for
carpet to $5.00 per square yard. If a customer wants to purchase carpet for a 9' x 12' room, how much is
the installation charge?
A. $45.00
C. $540
B. $60.00
D. $300
10. Mary Sue works as a customer-service representative for a large retail company. During her eight-hour
shift yesterday, she spent 68% of her time taking 48 customer orders and 31% of her time resolving six
customer complaints. She spent the rest of her time studying the company's newest catalog. What was
the average amount of time that Mary Sue spent handling each customer complaint?
A. 24.8 minutes
C. 8.8 minutes
B. 6.8 minutes
D. 54.4 minutes
11. An unbranded shirt costs $15.00, while a branded shirt costs $30.00. What is the price ratio between the
two products?
A. 15 to 30
C. 2
B. 1 to 2
D. 1/2
12. A business buys 100 scooters for $35 each and sells them for $55 each. What is the business's net profit
if it has operating expenses of $1,425?
A. $525
C. $555
B. $535
D. $575
13. A business that increases productivity by 2% on sales of $150,000 while expenses remain the same can
expect an increase of __________ in total sales.
A. $4,500
C. $1,500
B. $2,000
D. $3,000
14. Calculate the marginal revenue if a business has total revenue of $5,700 from producing and selling
3,800 items.
A. $1.30
C. $1.70
B. $1.50
D. $1.80
15. The average Consumer Price Index (CPI) for 2007 was 207.34. In 2008, the average CPI was 215.30.
What was the rate of inflation for 2008, rounded to the nearest tenth of a percent?
A. 8.0%
C. 6.3%
B. 1.0%
D. 3.8%
16. What is the trade surplus if net exports are $6,964,023 and imports are $6,497,382?
A. $466,641
C. $502,789
B. $475,356
D. $510,125
17. In January 2008, Ohio's unemployment rate was 6.4%. At the same time in 2009, the state's
unemployment rate was up to 9.8%. What percent increase in unemployment does this represent?
A. 46.9%
C. 52.5%
B. 34.7%
D. 65.3%
18. A business located in a country that levies a 15% tax on imports buys a $150,000 piece of equipment
from a business in another country. What is the cost of the equipment?
A. $165,000
C. $160,000
B. $172,500
D. $175,500
Test 1025
MATH APPLICATIONS IN BUSINESS
3
19. Joel took $950 when he went on a business trip to Japan. While there, he exchanged his U.S. dollars for
yen. At the time, one dollar was equal to 92.055 yen. In Japan, he spent 36,000 yen. Following his time in
Japan, he travelled to China. In China, he exchanged his yen for Chinese Yuan. The exchange rate was
0.0742 Chinese Yuan per yen. He spent 2,200 Chinese Yuan in China. After a week in China, he
returned home and exchanged his Chinese Yuan for dollars. At that time, one Chinese Yuan was worth
$0.1463. How many U.S. dollars did Joel have left after his trip to Japan and China?
A. $294.29
C. $267.22
B. $221.34
D. $236.68
20. This morning, Carlos drove from Minnesota to Ontario to take a client to lunch. While driving the client to
the restaurant, Carlos sees a sign that indicates that the speed limit is 60 kilometers per hour (kph). If
one kilometer per hour is equal to approximately 0.62 miles per hour, what is the speed limit for that road
in miles per hour (mph)?
A. 96.8 mph
C. 62.0 mph
B. 33.3 mph
D. 37.2 mph
21. Jillian and five of her fellow employees have proposed that the dress code at their place of business
needs be changed. To make any revisions to the dress code, at least 85% of the 56-member staff must
be in favor of the changes. Jillian and her five colleagues need to persuade at least __________ other
employees to approve their proposal for it to pass.
A. 48
C. 42
B. 45
D. 50
22. Cheryl is interested in purchasing either a Buffalo Burger franchise or a Pete's a Pizza franchise. The
initial franchise fee for Buffalo Burger is $15,000. Pete's a Pizza's initial franchise fee is $18,000. Buffalo
Burger would require Cheryl to pay six percent of her business's monthly sales in royalty fees. The
royalty fee for Pete's a Pizza would be four percent of her monthly sales. Cheryl anticipates that her
average monthly sales will be $7,700, regardless of which franchise she purchases. What is Cheryl's
total amount due to each company for its initial franchise fee and one month's royalty fees?
A. Buffalo Burger: $15,462; Pete's a Pizza: $18,308
B. Buffalo Burger: $15,308; Pete's a Pizza: $18,462
C. Buffalo Burger: $15,620; Pete's a Pizza: $18,208
D. Buffalo Burger: $15,728; Pete's a Pizza: $18,820
23. Karla is obtaining a short-term, simple interest loan to start her home-based business. If she borrows
$3,000, at a 4.25% interest rate, and pays the loan back two years aft er obtaining the loan, how much
interest will Karla pay?
A. $3,127.50
C. $3,255
B. $127.50
D. $255
24. A small-business owner is trying to decide whether to rent or buy office furniture. The monthly rental is
$275 per person, and there are six people who will need furniture. The cost of buying the furniture is
$6,500 per person. What would you advise the small-business owner to do?
A. Buy the furniture because rental costs will exceed the purchase price in 1.97 years.
B. Rent the furniture because rental costs are much less a year than the purchase price on an
annual basis.
C. Buy the furniture because rental costs will be less than the purchase price in 2.2 years.
D. Rent the furniture because rental costs will be less than the purchase price for 3.4 years.
25. Walt deposits $12,000 in a savings account with an annual interest rate of four percent. The interest is
compounded semiannually. If he does not deposit funds to nor withdraw funds from the account, how
much money will be in the account in one year?
A. $12,484.80
C. $12,480.00
B. $12,479.61
D. $12,489.60
Test 1025
MATH APPLICATIONS IN BUSINESS
4
26. Cindi, who is in the process of buying her first home, just received a Good Faith Estimate from her
lender. According to the document, she will need to make a $32,000 down payment (20% of the home's
purchase price). The document estimates her closing costs, which she will also need to pay out-ofpocket, as: $275 for a survey, $640 for title insurance, $775 in legal fees, $350 recording fee, and two
percent of her total loan amount as a loan origination fee. How much money does Cindi need to take to
the closing to purchase her home?
A. $37,240
C. $38,350
B. $36,600
D. $39,145
27. Sophia's father just bought her a car for $6,390. One of Sophia's financial goals is to pay her father back
for the car in three years. She usually receives about $400 cash for her birthday each year. If she saves
all of her birthday money to help pay for the car, how much additional money should Sophia set aside
monthly to pay her dad back in full in three years?
A. $155.28
C. $166.39
B. $144.17
D. $177.50
28. Ben saves 18% of his weekly income so that he can purchase a new car. His monthly income is $2,600.
How much car money will Ben have in 75 weeks?
A. $9,000
C. $8,775
B. $8,424
D. $8,100
29. Heidi earns $9.56 per hour during her regular 40-hour workweek, time and a half for overtime on
weekdays, and double time for weekends. Her pay stub shows that she worked 40 regular hours during
the week, three extra hours on Wednesday, and six hours on Saturday. What is her gross pay for the
week?
A. $540.14
C. $525.80
B. $511.46
D. $554.48
30. Kevin deposited his paycheck for $788.23, a tax refund for $2,319, two $100 bills, three $50 bills, and 43
dimes. He asked for five $10 bills as cash back. What was the net deposit to his account?
A. $3,461.53
C. $3,491.53
B. $3,411.53
D. $4,019.53
31. Brynn needs to borrow $12,000 for a short period of time. Four different local financial institutions have
offered her a loan for that amount, but the terms vary from place to place. The local credit union's loan is
for 120 days at 7% interest. Star Bank is charging 4% interest for 90 days. City Center Bank charges
6.875% interest for 100 days, and King Bank's loan is for 150 days at 9% interest. All four institutions use
the exact interest method to calculate interest. Where would Brynn pay the least amount of interest over
the life of the loan?
A. Credit union
C. City Center Bank
B. Star Bank
D. King Bank
32. Last year, Josie earned $27,510 as an administrative assistant, and her taxable interest was $765. She is
claiming one exemption for herself and taking the single standard deduction. The exemption totals
$3,650, and her standard deduction is $5,700. The federal income tax withheld from her pay last year
totaled $2,532. Her tax rate is 15%. How much more tax does she owe?
A. $299.10
C. $306.75
B. $276.80
D. $315.78
33. Annie wants to invest in a load mutual fund. She has spoken with four different financial advisors. Each
has recommended a different fund to Annie. Benjamin recommended a fund with a net asset value (NAV)
of $23.19 and an offer price of $28.34. Carl suggested a fund with a NAV of $12.67 and an offer price of
$15.32. Debi talked with Annie about a fund with a NAV of $35.98 and an offer price of $38.90. Effy
recommended a fund with a NAV of $45.22 and an offer price of $51.42. Which financial advisor is
charging the lowest rate of commission?
A. Carl
C. Debi
B. Benjamin
D. Effy
Test 1025
MATH APPLICATIONS IN BUSINESS
5
34. A mutual fund's total liabilities are $5,600,000, and its assets total $7,950,000. There are currently
31,000,000 shares outstanding. What is the net asset value of the fund?
A. 6.45%
C. 7.29%
B. 7.58%
D. 8.06%
35. According to today's stock quotation table, the current price of Macy's stock is $18.99 per share. Last
year, the company paid investors a dividend of $0.20 per share. What is the current yield on Macy's
stock?
A. 1.05%
C. 3.80%
B. 2.00%
D. 4.95%
36. A company has 40,000 shares of preferred stock that pay $1.25 per share as well as 75,000 shares of
common stock. The company's board of directors has declared a $240,000 dividend. What is the
dividend per share for the company's common stock?
A. $1.25
C. $2.38
B. $2.53
D. $3.66
37. What amount might a business lose as a result of taking a speculative risk if it invests $15,000 in a
savings account, buys a $25,000 piece of equipment, invests $20,000 in a new venture, and buys
$10,000 worth of office supplies?
A. $10,000
C. $20,000
B. $15,000
D. $25,000
38. Sara receives health insurance as an employment benefit. Her monthly premium is $575, and her
employer pays 60% of the premium. How much will Sara pay each paycheck for her insurance coverage
if she is paid every two weeks? (Round up to the next whole cent.)
A. $265.39
C. $106.16
B. $230.00
D. $160.00
39. What will the insurance settlement be for property damage of $275,000 if the insurance company pays
90% of the damage, and the business has a $2,500 deductible?
A. $272,500
C. $270,000
B. $247,500
D. $245,000
40. What is a business's net worth if it has total assets of $4,250, total liabilities of $1,050, cash on hand of
$350, and inventory worth $275?
A. $3,550
C. $3,475
B. $3,050
D. $3,200
41. A business expects monthly cash sales to be $5,300 and receivables to be $1,200. Total cost of goods
sold will be $1,750, fixed expenses will be $2,150, and variable expenses will be $1,975. Calculate the
total cash paid out.
A. $7,075
C. $5,875
B. $4,675
D. $8,650
42. When preparing a cash flow statement, what is a business's cash flow for a month if it has monthly sales
of $30,000, salaries of $9,500, other operating expenses of $14,250, and income from investments of
$1,150?
A. $15,750
C. $30,650
B. $7,400
D. $64,900
43. Calculate a business's total liability based on the following information in its balance sheet: $46,500 in
commissions owed to salespeople, $23,225 payable in income tax, $12,840 in accounts payable, and
$37,000 in accumulated depreciation.
A. $119,565
C. $69,725
B. $73,065
D. $82,565
Test 1025
MATH APPLICATIONS IN BUSINESS
6
44. What is a business's gross profit if its profit-and-loss (income) statement lists $875,250 in revenue,
$341,500 in cost of goods sold, $263,000 in operating expenses, and $46,500 in advertising?
A. $487,250
C. $270,750
B. $533,750
D. $612,250
45. What is the average monthly discount rate that a business would have to pay for acceptance of bank
cards during the summer quarter given the following data:
Month
June
July
August
A. $2,840.76
B. $2,500.00
Discount Rate
2% of sales
2% of sales
2% of sales
Sales
$125,000
$136,000
$148,000
C. $2,726.67
D. $2,762.76
46. Calculate the amount of additional capital a business needs to obtain in order to purchase a new piece of
equipment that costs $250,000 if a bank will loan 75% of the price and the business has $20,000 in
available cash.
A. $25,000
C. $62,500
B. $42,500
D. $75,000
47. A business owner developing an operating budget has determined that total expenses for the year will be
$124,950. If the owner wants to have a gross profit of $63,500, what amount of sales should be forecast?
A. $188,450
C. $190,300
B. $184,950
D. $192,500
48. If a business allocates six percent of its previous annual sales to its promotional budget, and it had
$435,600 in sales last year, how much money will the business allocate for promotion?
A. $28,746
C. $26,136
B. $27,266
D. $25,876
49. Forecast sales for a new brand of soup in Decatur County if its market potential is $3,785,000, and 15
businesses in the county will be selling the soup. Round the answer to the nearest whole number.
A. $3,028,008
C. $252,334
B. $56,775,000
D. $349,885
50. A business uses inventory turnover rates to determine if monthly inventory is too large or too small. What
is the turnover rate if the average merchandise inventory is $55,000 and the cost of goods sold is
$374,000?
A. 6.8%
C. 1.5%
B. 4.2%
D. 8.6%
51. How much is a business's net profit if its sales are $819.50, cost of goods is $625.00, and operating
expenses are $67.50?
A. $752.00
C. $127.00
B. $194.50
D. $702.00
Test 1025
MATH APPLICATIONS IN BUSINESS
7
52. Lindy's Boutique has the petty cash fund depicted in the following table. Determine the balance of the
th
th
st
fund on July 5 , 18 , and 31 .
For 07/01 through 07/31
Date
6/30
7/1
7/5
7/8
7/13
7/18
7/21
7/31
Description
Balance
Deposit to petty cash
Pizza for overtime
workers
Amount
Deposited
$31.47
$50.00
Received
By
Balance
Approved
By
$31.47
Anna Smith
Jack
Jones
Lynda
Miller
Marie
Callendar
Pete
Chason
Sam
Roberts
$18.53
Birthday cake
Postage for special
delivery letter
Sympathy card
Parking
reimbursement
Deposit to petty cash
Amount
Withdrawn
$16.79
$5.98
$4.99
$3.00
Anna Smith
Anna Smith
Anna Smith
Anna Smith
Anna Smith
$50.00
A. (5th) $50.00, (18th) $4.99, (31st) $50.00
th
th
st
B. (5 ) $31.47, (18 ) $46.05, (31 ) $33.08
th
th
st
C. (5 ) $81.37, (18 ) $35.08, (31 ) $35.08
th
th
st
D. (5 ) $62.94, (18 ) $35.18, (31 ) $82.18
53. A new medical practice is trying to determine how many billers it needs on staff. According to an industry
benchmark, a biller can process 10,000 claims per year. If the practice anticipates having 35,000 claims
a year, how many billers does the practice need?
A. Three full-time and one part-time
C. Two full-time and one part-time
B. Four full-time
D. Six full-time
54. Jenny interviewed eight job applicants for a mid-level position in marketing research. She spent 55
minutes with each of the five applicants who had prior work experience and 45 minutes with each of the
three applicants who were recent college graduates with no work history. Jenny spent approximately
_____% of her time with each of the five experienced applicants.
A. 14.1
C. 11.5
B. 11.0
D. 13.4
55. Crocker Industries has a sales force of eight salespeople. Three of these salespeople earn $42,000 per
year, two earn $54,000 annually, and three others earn $61,000 per year. What is the mean salary?
A. $45,555
C. $47,667
B. $52,125
D. $51,434
56. JLH Industries recently hired a new second-shift line supervisor. Members of JLH's human resources
department spent 20 minutes processing her application, 45 minutes contacting her references, 90
minutes interviewing her, and 40 minutes processing her new-hire paperwork. This type of H.R. work is
charged at $64 per hour. What was the cost of selecting and hiring the new supervisor?
A. $192
C. $208
B. $165
D. $243
Test 1025
MATH APPLICATIONS IN BUSINESS
8
57. What is the average number of employee complaints handled by the human resources department
monthly, given the following number of complaints handled in the past year? (Round up to the next
hundredth.)
January
February
March
April
May
June
July
August
September
October
November
December
A. 24.86
B. 23.58
22
14
12
16
31
17
10
8
20
26
32
24
C. 18.44
D. 19.34
58. You are preparing to survey students in four high schools. School A has 459 students, School B has 521
students, School C has 482 students, and School D has 583 students. You want to select a 20 percent
random sample. What is the total size of your sample?
A. 409 students
C. 459 students
B. 307 students
D. 583 students
59. Determine the mode from the following survey data: 32 people attend the theater one time a year; 88
people attend the theater two times a year; 56 people attend the theater three times a year; 39 people
attend the theater four times a year; 24 people attend the theater five times a year.
A. 3
C. 4
B. 2
D. 5
60. A survey was emailed to 8,600 people. What is the survey's usable response rate given the following
information: 3,125 contained non-response errors and could not be used; 3,800 surveys were not
returned.
A. 82.24%
C. 44.19%
B. 36.34%
D. 19.48%
61. The Decadent and Delicious Chocolate Company recently added a line of sugar-free candies to its
product line. The company estimates that this action will increase its market share from 20% to 30%
within a year. If the industry sales totaled $5,250,500 last year, how much additional sales revenue will
the new product line generate for the business in a year?
A. $500,250
C. $525,050
B. $550,250
D. $525,500
62. Determine the yearly market potential for a new brand of dog food in Franklin County when dog owners
spend an average of $45 month per dog on dog food, and there are 143,000 dogs in the county:
A. $70,785,000
C. $77,220,000
B. $6,435,000
D. $83,665,000
63. If 60% of a business's 400 current customers spend an average of $350 per year and 40% spend $275
per year, calculate the business's sales forecast for next year if sales are expected to stay the same.
A. $128,000
C. $135,000
B. $116,000
D. $140,000
Test 1025
MATH APPLICATIONS IN BUSINESS
9
64. A business currently has 1,750 customers and develops a marketing plan to increase that number by 4%
this year and 5% next year. If the plan is successful, how many customers will the business have by the
end of next year?
A. 1,900
C. 1,911
B. 1,907
D. 1,925
65. Kirk needs to save six computer files for future use. These files range greatly in size: 66.5 kilobytes, 497
kilobytes, 2,141 kilobytes, 4,900 kilobytes, 3.87 megabytes, and 4.3 megabytes. (1 megabyte = 1,024
kilobytes). How much space will these files use on Kirk's flash drive?
A. 15,970.58 kilobytes
C. 15,272.72 kilobytes
B. 15,441.67 kilobytes
D. 15,092.77 kilobytes
66. Logan sent an e-mail message to 12 coworkers. Each coworker forwarded the e-mail message to 10
other people. Each of those individuals forwarded the message to 15 more people. How many people
received the e-mail message that Logan sent out?
A. 2,412
C. 1,812
B. 2,212
D. 1,612
67. Patrick's slideshow presentation contains 72 slides. He has programmed the presentation software to
reserve 90 seconds to each slide before automatically advancing to the next one. How long is his
slideshow?
A. 1 hour, 48 minutes
C. 1 hour, 12 minutes
B. 1 hour, 8 minutes
D. 1 hour, 36 minutes
68. Calculate the number of customers who made purchases online last month if the business has 2,000
customers and 28% made purchases through a catalog and 37% made purchases in person.
A. 900
C. 1,100
B. 700
D. 1,300
69. A coffee shop implemented a customer-loyalty program. For every five lattés each customer orders, s/he
receives one free latté. In the past year, 46 customers received three free lattés, 32 customers received
four free lattés, and 25 customers received five free lattés. How many lattés did the business sell in
relation to its customer loyalty program?
A. 1,955
C. 1,685
B. 1,650
D. 1,935
70. The Fredric Company is installing an 1,800-feet-long security fence with two gates on its property. The
fencing costs $15 per foot, and gates are $535 each. What is the total cost for the fence, including the
gates?
A. $29,475
C. $27,000
B. $26,625
D. $28,070
71. Brian, who owns a small business, received an invoice today from his favorite supplier. The supplier is
Brian's favorite because it gives him 20% discount on his purchases, excluding shipping and handling.
The invoice shows a gross amount of $844.90 (before the discount) and shipping and handling charges
of $24.57. What is Brian's total amount due?
A. $695.58
C. $700.49
B. $675.92
D. $704.47
72. Hair & Nails is a beauty salon that sells its store brand of shampoo to clients. The salon sells 1,700
bottles of shampoo a month in 28 working days. Its supplier's lead time for delivering the shampoo is
three days. Hair & Nails likes to keep 35 bottles as safety stock. What is Hair & Nails' reorder point for its
shampoo?
A. 84
C. 183
B. 218
D. 334
Test 1025
MATH APPLICATIONS IN BUSINESS
10
73. Chanel, the owner of a small craft store, needs to select a vendor selling embroidery floss and thread.
She has narrowed her search down to four different suppliers offering her a cash discount. Vendor W's
terms are 5/7, 3/14, 1/30, n/60 with shipping charges of $12.50. Vendor X is offering terms of 8/7, 4/14,
n/30 and free shipping. The terms from Vendor Y are 3/30, 2/60, n/90 with $32.10 shipping charges.
Vendor Z's offer is 10/5, 7.5/10, 5/14, 2.5/30, n/60 and $24.75 shipping. Chanel expects her total before
any discount to be about $975, and she anticipates paying the vendor approximately four weeks after the
invoice date. Which vendor should Chanel select?
A. Vendor W
C. Vendor Y
B. Vendor X
D. Vendor Z
74. A clothing manufacturer recently agreed to sell blue jeans with a list price of $87,900 to a retail chain at a
discount. The net price for the jeans is $67,500. What is the trade discount rate?
A. 23.2%
C. 21.2%
B. 20.4%
D. 22.8%
75. Caleb must order parts for the Kinsey Company, which manufactures small electronic appliances. To
make the Model SU10 vacuum cleaner, the production line needs six 3/8” nickel-plated flat head screws
per vacuum cleaner. The production line makes 32 vacuum cleaners an hour, and operates 12 hours a
day. How many screws will Caleb need to order to cover the company's production needs for 30 days?
A. 68,860
C. 69,120
B. 72,420
D. 72,660
76. A quality-control specialist at a manufacturing plant has recommended that the company institute new
procedures to reduce the number of defective products coming off the assembly line. Currently, an
average of 26 defects are identified each day. If the new quality-control procedures are instituted, the
number of defects found each day is expected to drop by 48%. Approximately how many defects can the
company expect to find in one year's time after these procedures are put in place?
A. 9,490
C. 4,555
B. 2,496
D. 4,935
77. What amount should a business predict for next year's fixed costs if this year it spent $36,000 in rent for
office space, $5,250 for a special advertising campaign, $7,500 for insurance premiums, $4,150 for
utilities, and $12,000 in employee bonuses?
A. $64,900
C. $52,900
B. $40,150
D. $47,650
78. An employee routinely gives friends the 15% employee discount. If the employee sells $26,500 worth of
goods to friends in a year, how much loss is the employee causing the business?
A. $3,975
C. $4,240
B. $3,710
D. $4,505
79. Caroline's small business offers mobile disc jockey services for wedding receptions, parties, and other
social events. The business's total fixed costs are $4,300, and its variable costs for a three-hour local
event are $62. Caroline currently charges $250 for three hours of her business's services. If she raised
her price to match that of competitors who charge $325 for the same time period, what would be the
difference in breakeven points for her business using the two different prices?
A. $75
C. $188
B. $404
D. $263
80. A business decides to buy a five-year service contract on an expensive color copier that it owns. If the
total cost for the contract will be $5,500 plus $.02 per copy, what will the business pay the first year if it
makes 15,000 copies?
A. $1,200
C. $1,100
B. $1,400
D. $1,500
Test 1025
MATH APPLICATIONS IN BUSINESS
11
81. A business leases 800 square feet of space at a rate of $2.50 per square foot a month. Next year the rate
will increase by 4% per square foot and the business will lease an additional 125 square feet. What will
the monthly rent be next year?
A. $2,000
C. $2,250
B. $2,405
D. $2,615
82. To control payroll expenses, a business hires four part-time employees to work 20 hours each week for
$11.50 an hour rather than two full-time employees at a salary of $575 each per week. Calculate the
amount the business will save during a two-week pay period.
A. $460
C. $310
B. $230
D. $190
83. Calculate the amount a business's monthly expenses decreased from the amount budgeted based on the
following information: budgeted $175,500 in sales with 55% of that amount for expenses compared to
actual sales of $168,400 with 56% of that amount spent on expenses.
A. $2,456
C. $2,221
B. $2,168
D. $2,563
84. Randy, a certified public accountant, is interested in taking three continuing professional education
courses online. He has located two different organizations online that offer courses that fit his
requirements. Online Education for CPAs offers Fair Value Accounting for $109.95, Auditing
Developments for $119.95, and GAAP Developments for $139.95. Credit for Accountants, which offers a
15% discount for purchasing at least two of its courses, charges $129.95 for each of its courses (before
the discount): Internal Control and The Sarbannes-Oxley Act. Which three courses are the least
expensive?
A. Fair Value Accounting, Internal Control, and The Sarbannes-Oxley Act
B. Fair Value Accounting, Auditing Developments, and Internal Control
C. Fair Value Accounting, Auditing Developments, and The Sarbannes-Oxley Act
D. Auditing Developments, Internal Control, and The Sarbannes-Oxley Act
85. Eddie was recently promoted to the position of supervisor. Before the promotion, his hourly wage was
$15.00. He received a raise of 5% when he was promoted. If he works 40 hours per week, what is his
new annual income?
A. $32,760
C. $33,800
B. $31,200
D. $34,460
86. If an item is purchased at 12 for $3.60, with operating expenses of $.09 per item and desired profit of
$.11 per item, what would be the selling price of one item?
A. $.39
C. $.41
B. $.50
D. $.32
87. Marcus purchased an HDTV for $3,200. He also bought an extended two-year warranty for $120 a year.
The sales tax rate is 6% on both items. How much was Marcus's total bill?
A. $3,496.60
C. $3,646.40
B. $3,519.20
D. $3,756.80
88. Calculate the stock turnover rate if a store keeps an average of 687 packages of AA batteries in stock
and sells 6,183 packages of AA batteries a year.
A. 8
C. 11
B. 9
D. 12
89. An online cookware store sold 750 sets of carving knives last year and is on track to sell 900 sets this
year. How many sets of carving knives should it buy to sell next year if it expects another 20% increase in
sales?
A. 1,075
C. 1,035
B. 1,080
D. 1,090
Test 1025
MATH APPLICATIONS IN BUSINESS
12
90. Last year, a business bought $2,680 worth of office supplies and $1, 355 worth of paper products from a
vendor. If a competing vendor offers a 6% discount this year, what amount will the business save by
selecting the new vendor?
A. $160.80
C. $135.50
B. $242.10
D. $268.40
91. The J.J. Jenkins Company recently developed a banner ad to attract more visitors to its web site. If 1.8
million individuals on the Internet see the advertisement, three percent of them go to the J.J. Jenkins site,
and six percent of those people purchase the company's products, how many sales result?
A. 6,480
C. 4,960
B. 1,620
D. 3,240
92. The local radio station charges $225 for a 60-second advertising spot during its morning show running
from 6:00 a.m. to 9:00 a.m. During the station's flash-back lunch show, which runs from 11:00 a.m. to
1:00 p.m., 60 seconds cost $175. Sixty-second commercials during rush hour, which goes from 4:00 p.m.
to 6:30 p.m., cost $200. How much would it cost for you to purchase four morning advertising spots, two
lunchtime spots, and three rush hour spots?
A. $1,850
C. $1,800
B. $1,575
D. $2,025
93. Determine the click-through rate of an online advertisement if the number of click-throughs totaled 18,000
and the number of impressions totaled 450,000.
A. 5%
C. 4%
B. 4.75%
D. 5.5%
94. Olivia needs to order gourmet cookies for a large event that she is planning for her business. She
determines that 180 guests will attend the event and estimates that each guest will eat two cookies. If the
cookies are sold three dozen per platter, how many platters of cookies will Olivia need to order from the
bakery?
A. 12
C. 10
B. 14
D. 8
95. Determine the response-rate percentage of a cable television infomercial if 500,000 people were
exposed to the infomercial and 30,000 people responded to the infomercial within two hours of airing.
A. 5%
C. 8%
B. 4%
D. 6%
96. Marina is buying a ski-trip package for $2,300 to Italy with the Fresno Ski Club. However, she wants to fly
home two days later than the other ski club members. To do this, she will have to add an additional $450
for airfare and $125 a night for a hotel room. How much will Marina's special ski-trip package cost before
taxes?
A. $3,000
C. $3,125
B. $2,875
D. $2,975
97. Calculate the total owed for the following sales transaction that has a sales-tax rate of 5.75%: 3 garden
shovels for $21.95 each; 24 bags of mulch $4.60 per bag; 4 flats of flowers for $11.95 per flat; 6 pairs of
gardening gloves for $6.50 pair.
A. $294.68
C. $262.28
B. $254.38
D. $278.18
98. A guest reserved a hotel room for three nights at the rate of $175 a night. The room tax is 14%. The hotel
is offering a 15% discount on the third and additional nights when guests stay for more than two nights.
What will the guest's hotel bill be?
A. $548.38
C. $598.50
B. $508.73
D. $568.58
Test 1025
MATH APPLICATIONS IN BUSINESS
13
99. While developing a business plan, an entrepreneur analyzed the incomes of the families within the new
business's trading area. Calculate the average family income if 25% of the families earn approximately
$50,000 per year, 25% of the families earn $60,000 per year, 25% of the families earn $40,000 per year,
and 25% of the families earn $30,000 per year.
A. $46,000
C. $40,000
B. $42,000
D. $45,000
100. A business's budget projects monthly sales of $88,000. If sales for one month are $85,500, the actual
sales are __________ of budgeted sales.
A. 96.1%
C. 97.2%
B. 96.5%
D. 97.7%
Test 1025
MATH APPLICATIONS IN BUSINESS – KEY
14
1. C
$14,436. To determine the remaining amount of Jack's loan, first calculate how much Jack has left to pay
after making the down payment ($23,670 X 80% [or .8] = $18,396). From that amount, subtract the
$4,500 rebate to obtain the amount Jack would still owe on the car before interest is added (18,396 $4,500 = $14,436).
SOURCE: BL:071
SOURCE: Hanson, M. (2010). Business math (17th ed.) [p. 210]. Mason, OH: South-Western Cengage
Learning.
2. D
$48,692. To calculate Jason's share of this year's net income, first determine the partners' total
investment in the business by adding together the three partners' investments ($79,000 + $143,000 +
$24,000 + $30,000 = $276,000). Next, divide Jason's investment by the partners' total investment in the
business ($143,000 / $276,000 = 51.8%). This is Jason's share of the partners' total investment in the
restaurant. Finally, multiply Jason's share by this year's net income to determine his share of the income
($94,000 X 51.8% = $48,692).
SOURCE: BL:003
SOURCE: Hanson, M. (2010). Business math (17th ed.) [pp. 523-524]. Mason, OH: South-Western
Cengage Learning.
3. B
$17,181.15. To calculate the company's state unemployment tax, multiply its total wages by the portion of
those wages subject to the tax ($348,502 X 85% = $296,226.70). Then, multiply the wages subject to the
tax by the state unemployment tax rate ($296,226.70 X 5.8% = $17,181.15).
SOURCE: BL:009
SOURCE: Burton, S., & Shelton, N. (2005). Practical math applications (2nd ed.) [pp. 203-204]. Mason,
OH: South-Western Cengage Learning.
4. D
$92.96. Julianna's net capital gain is equal to her gross capital gain minus her gross capital loss. To
determine the tax on the net capital gain, first determine how much she paid for the stocks by multiplying
the number of shares that she purchased by the purchase price (40 X $67.21 = $2,688.40; 25 X $52.66 =
$1,316.50). Next, determine how much money she received as a result of selling the stocks. To do so,
multiply the number of shares sold by the sales price (40 X $92.56 = $3,702.40; 25 X $36.89 = $922.25).
Subtract the amount that she used to purchase each stock from the corresponding amount that she
received as a result of selling the stock ($3,702.40 - $2,688.40 = $1,014.00; $922.25 - $1,316.50 = $394.25). So, she earned $1,014.00 by investing in LMNOP stock, but she lost $394.25 by investing in
QRS stock. To calculate her net capital gain, subtract her loss from her gain ($1,014.00 - $394.25 =
$619.75). Finally, multiply her net capital gain by her tax rate to determine how much capital gains tax
she has to pay ($619.75 X 15% = $92.96).
SOURCE: BL:134
SOURCE: Perez, W. (2009, January 3). Capital gains tax: Essential tax tips for capital gains and losses.
Retrieved September 22, 2009, from
http://taxes.about.com/od/capitalgains/a/CapitalGainsTax.htm
5. C
$43.20. To determine the selling price for one pair of roller blades, first multiply the cost to produce one
pair by the markup ($24 X 80% = $19.20). So, PlayTime marks the roller blades up by $19.20. To find the
selling price, add together the production cost and the markup amount in dollars ($24 X $19.20 =
$43.20).
SOURCE: CM:008
SOURCE: Brechner, R. (2009). Contemporary mathematics for business and consumers: Annotated
instructor's edition (5th ed.) [pp. 253-254]. Mason, OH: South-Western Cengage Learning.
Test 1025
MATH APPLICATIONS IN BUSINESS – KEY
15
6. A
62,040. Employees must often provide customers with directions to other locations. The employee should
provide clear directions, and may want to include buildings (e.g., Chevron gas station) or landmarks to
look for along the way. To calculate the number of feet between the store and the branch location, first
add the total number of miles the customer will need to drive (1.25 + 2.25 + 2 + 6.25 = 11.75 miles).
Then, multiply the total number of miles by the number of feet per mile to obtain the total number of feet
the customer will travel to the branch location (11.75 miles x 5,280 feet = 62,040 feet).
SOURCE: CO:083
SOURCE: Sun, C. (2008, April 8). Succeeding at Work: Principles for giving driving directions.
Retrieved September 24, 2009, from
http://succeedingatwork.blogspot.com/2008/04/principles-from-giving-driving.html
7. C
$294.48. To calculat e how much it will cost for Mandy to send her mail, first multiply the number of
postcards and the number of letters by the corresponding prices ($0.28 X 387 = $108.36; $0.44 X 423 =
$186.12). Then, add together the cost of sending all of the postcards and the cost of sending all of the
letters ($108.36 + $186.12 = $294.48).
SOURCE: CO:133
SOURCE: Bovée, C. L., & Thill, J. V. (2008). Business communication today (9th ed.) [pp. A-12-A-16].
Upper Saddle River, NJ: Pearson Prentice Hall.
8. C
2.25. The project manager should advise the meeting participants about the length of the meeting, so
they can plan their workloads appropriately. To determine the length of the meeting in hours, you must
determine how many minutes the meeting is estimated to last. First, multiply the number of members who
are presenting a status report by the length of time allocated to the each report (9 X 10 = 90). Then, add
together the total number of minutes needed for the status reports to the number of minutes allocated to
the vendor's presentation and the number of minutes allocated to the question and answer session (90 +
15 + 30 =135). Then, divide the total number of minutes that the meeting will last by the number of
minutes in an hour (135 ÷ 60 = 2.25). The meeting will last for 2.25 hours.
SOURCE: CO:140
SOURCE: Lesikar, R.V., & Flatley, M.E. (2005). Basic business communication: Skills for empowering
th
the Internet generation (10 ed.) [pp. 415-416]. Boston: McGraw-Hill/Irwin.
9. B
$60.00. To calculate the installation charge, first calculate the total square footage of the room by
multiplying the foot width of the room by the foot length of the room (9 X 12 = 108). Then, divide the total
square footage of the room by the number of square feet in a square yard (3 feet per yard X 3 feet per
yard = 9 square feet per square yard) to obtain the total number of square yards (108 ÷ 9 = 12). Then,
multiply the total number of square yards by the installation charge per square yard to obtain the total
installation charge (12 X $5.00 = $60.00).
SOURCE: CR:007
SOURCE: Hilton, M. (2009). Carpet measuring. Retrieved September 25, 2009, from
http://www.carpetbuyershandbook.com/buying-carpet/important-buying-info/carpetmeasuring.php
10. A
24.8 minutes. To determine the average amount of time that Mary Sue spent handling each customer
complaint, first convert the number of hours that she worked to minutes (8 hours X 60 minutes = 480
minutes). Then, multiply the total number of minutes worked by the percentage of time spent resolving
customer complaints (480 minutes X 31% = 148.8 minutes). Finally, divide the number of minutes spent
resolving customer complaints by the number of complaints that Mary Sue handled yesterday (148.8
minutes / 6 = 24.8 minutes).
SOURCE: CR:010
SOURCE: Rokes, B. (2000). Customer service: Business 2000 (pp. 106-112). Mason, OH: SouthWestern.
Test 1025
MATH APPLICATIONS IN BUSINESS – KEY
16
11. B
1 to 2. If the price of one product is $15.00 and another product is $30.00, they have a price ratio of 1 to
2 since one product has twice the value of the other product. If the price of each item were to double,
they would still have the same price ratio. Whether a person bought the branded shirt or the unbranded
shirt would be determined by the value of the item to the consumer. 15 to 30, 1/2, and 2 are not correct
price ratios in this case.
SOURCE: EC:006
SOURCE: Brechner, R. (2009). Contemporary mathematics for business and consumers: Annotated
instructor's edition (5th ed.) [pp. 149-150]. Mason, OH: South-Western Cengage Learning.
12. D
$575. Net profit is the amount of money that is left after operating expenses are subtracted from gross
profit. In order to calculate gross profit, first determine the total cost of goods sold ($35 X 100 = $3,500)
and the total income from sales ($55 X 100 = $5,500). Then, subtract cost of goods sold from income to
determine gross profit ($5,500 - $3,500 = $2,000). Subtract operating expenses from gross profit to find
net profit ($2,000 - $1,425 = $575).
SOURCE: EC:010
SOURCE: EC LAP 2—Risk Rewarded (Profit)
13. D
$3,000. Productivity is the amount and the value of goods and services produced (outputs) from set
amounts of resources (inputs). In this example, a business has sales of $150,000 (outputs). If it increases
that output by 2% while its expenses (inputs) remain the same, the business can expect a $3,000
increase in total sales ($150,000 X 2% or .02 = $3,000).
SOURCE: EC:013
SOURCE: EC LAP 18—Make the Most of It (Productivity)
14. B
$1.50. Marginal revenue is the change in revenue generated by the sale of one additional item. As a
business produces and sells each additional item, its total revenue increases. In this example, the
business has total revenue of $5,700 from producing and selling 3,800 items. To calculate marginal
revenue, divide revenue by the number of items sold ($5,700 ÷ 3,800 = $1.50). Therefore, each time the
business sells an additional item, it will earn an additional $1.50 in revenue.
SOURCE: EC:023
SOURCE: Gottheil, F.M. (2002). Principles of economics (3rd ed.) [pp. 203-205]. Mason, OH: SouthWestern.
15. D
3.8%. Inflation is a rapid rise in prices that may occur when demand exceeds supply or when productivity
declines and costs of labor go up. The Consumer Price Index measures the change in prices for
consumer products as compared to a base period. The percentage increase in CPI from one year to the
next is an indication of the rate of inflation. So, the rate of inflation for 2008 is equal to the percentage
increase in CPI from 2007 to 2008. To calculate the rate of inflation for 2008, first subtract the 2007 CPI
from the 2008 CPI to find the difference between the two (215.30 - 207.34 = 7.96). Then, divide the
difference by the earlier CPI to find out how much the CPI increased from 2007 to 2008 (7.96 / 207.34 =
0.038 = 3.8%).
SOURCE: EC:083
SOURCE: Hanson, M. (2010). Business math (17th ed.) [pp. 366-369]. Mason, OH: South-Western
Cengage Learning.
16. A
$466,641. A trade surplus is a favorable balance of trade in which a nation's exports are greater than its
imports. A trade surplus increases the gross domestic product. Calculate a trade surplus by subtracting
imports from net exports ($6,964,023 - $6,497,382 = $466,641). In this example, imports are less than
net exports so a trade surplus of $466,641 exists.
SOURCE: EC:017
SOURCE: Hanson, M. (2010). Business math (17th ed.) [pp. 549-550]. Mason, OH: South-Western
Cengage Learning.
Test 1025
MATH APPLICATIONS IN BUSINESS – KEY
17
17. B
34.7%. To determine the percent increase in unemployment from January 2008 to January 2009, first
find the difference between the earlier and latter unemployment rates (9.8% - 6.4% = 3.4%). Then, divide
the difference in percentage points by the original amount of percentage points (3.4 ÷ 9.8 = 0.347 =
34.7%). That means that 34.7% more Ohioans were unemployed in January 2009 than in January 2008.
SOURCE: EC:082
SOURCE: Google. (2009). Unemployment rate. Retrieved September 22, 2009, from
http://www.google.com/publicdata?ds=usunemployment&met=unemployment_rate&idim=sta
te:ST390000&q=ohio%27s+unemployment+rate
18. B
$172,500. Some nations levy taxes on imported goods in order to obtain revenue or to protect an industry
that might be destroyed by foreign competition. Import taxes can be costly to businesses that buy
equipment from businesses in other countries because the taxes increase the cost of the equipment. In
this situation, a 15% tax is added to the cost of the equipment. To determine the final cost of the
equipment, multiply the price by the percent of tax ($150,000 X 15% or .15 = $22,500). Then, add the
amount of tax to the price to determine the final cost ($150,000 + $22,500 = $172,500).
SOURCE: EC:016
SOURCE: EC LAP 4—Beyond US (International Trade)
19. D
$236.68. To determine how much Joel's money was worth in yen at the beginning of his trip, multiply his
money in dollars by the dollar-to-yen exchange rate ($950 X 92.055 = 87,452.25 yen). Next, subtract the
amount that he spent in Japan from his original amount in yen (87,452.25 yen - 36,000 yen = 51,452.25
yen). To convert his remaining yen to Chinese Yuan, multiply his yen by the exchange rate for yen to
Chinese Yuan (51,452.25 yen X 0.0742 = 3,817.76 Chinese Yuan). Then, subtract the Chinese Yuan that
he spent in China (3,817.76 - 2,200 = 1,617.76 Chinese Yuan). Finally, multiply his remaining Chinese
Yuan by the number of dollars that one Chinese Yuan is worth to find out how much money he had left at
the end of his trip (1,617.76 X $0.1463 = $236.68).
SOURCE: EC:100
SOURCE: Yahoo! Finance. (2009). Currency converter. Retrieved September 21, 2009, from
http://finance.yahoo.com/currency-converter#from=USD;to=JPY;amt=1
20. D
37.2 mph. To make a good impression on his client, Carlos should obey the speed limit while driving his
client to the restaurant. However, speed is measured differently in Canada. In Canada, speed is
measured as kilometers per hour, while it is measured as miles per hour in the U.S. If the speedometer in
Carlos's car does not show kilometers per hour, Carlos needs to mentally convert 60 kph to miles per
hour. To do so, he should multiply the Canadian speed limit by the conversion rate (60 X 0.62 = 37.2
mph).
SOURCE: EC:130
SOURCE: McLean, J. (2009). Canadian speed limits table. Retrieved September 23, 2009, from
http://gocanada.about.com/od/canadatravelplanner/a/driving_speed.htm
21. C
42. Jillian and her five colleagues need to persuade at least 42 other employees to approve their
proposal for it to pass. To calculate how many other employees they must persuade, first multiply the
number of people on staff by the percentage of the staff that must vote in favor of the changes for them to
pass (56 X 85% = 47.6 = 48 people). Next, determine how many employees are already in favor of the
changes that we know of (1 + 5 = 6 employees). Finally, subtract the number of employees who are
definitely already in favor of the changes from the number of people who must approve the changes for
them to take effect (48 - 6 = 42 employees).
SOURCE: EI:012
SOURCE: Hilgert, R.R., & Leonard, E.C. (2001). Supervision: Concepts and practices of management
(8th ed.) [p. 621]. Cincinnati: South-Western College Publishing.
Test 1025
MATH APPLICATIONS IN BUSINESS – KEY
18
22. A
Buffalo Burger: $15,462; Pete's a Pizza: $18,308. To determine Cheryl's total amount due to each
company for its initial franchise fee and one month's royalty fees, first multiply Cheryl's expected average
monthly sales by the percentage of the royalty fee ($7,700 X 6% = $462; $7,700 X 4% = $308). These
are the average amounts that Cheryl would pay to each company in royalty fees each month. Her total
amount due can be found by adding the average amounts that Cheryl would pay in royalty fees each
month to each company's initial franchise fee ($462 + $15,000 = $15,462; $308 + $18,000 = $18,308).
SOURCE: EN:005
SOURCE: Greene, C.L. (2001). Entrepreneurship: Business 2000 (p. 30). Mason, OH: South-Western.
23. D
$255. New business owners often obtain loans to start their ventures. The amounts, interest rates, and
terms of the loans vary. The formula for calculating the interest amount for a simple interest loan is
principle (loan amount) X interest rate x time = interest amount in dollars. The amount of interest Karla
will pay on her loan is $3,000 X .0425 or 4.25% = $127.50; $127.50 X 2 = $255.
SOURCE: EN:016
SOURCE: Burton, S., & Shelton, N. (2005). Practical math applications (2nd ed.) [pp. 329-330]. Mason,
OH: South-Western Cengage Learning.
24. A
Buy the furniture because rental costs will exceed the purchase price in 1.97 years. To determine
whether to rent or buy office furniture, the small-business owner needs to first calculate the annual cost of
renting the furniture. To do this, multiple the monthly rate of $275 by the number of employees needing
furniture (6). This provides the total monthly rental expense: $275 X 6 = $1,650. Next, multiple the total
monthly rental expense by 12, the number of months in a year: $1,650 X 12 = $19,800. Now, determine
how much the small-business owner would pay if s/he bought the furniture. Multiply the furniture cost per
person by the number of people needing furniture: $6,500 X 6 = $39,000. Finally, divide the furniture's
total cost by the annual rental rate to determine how many years it would take for the cost of the rented
furniture to exceed the cost of the purchased furniture: $39,000 ÷ $19,800 = 1.97 years. In a little less
than two years, the cost of the rental furniture will exceed the cost of the purchased furniture. If the smallbusiness owner has the money, it would be worthwhile for her/him to buy rather than rent the office
furniture.
SOURCE: EN:021
SOURCE: Hanson, M. (2010). Business math (17th ed.) [p. 350]. Mason, OH: South-Western Cengage
Learning.
25. A
$12,484.80. To determine how much money will be in the account in one year, first divide the annual
interest rate by two, since the interest is compounded twice per year (4% / 2 = 2%). Next, calculate how
much interest Walt will receive during the first half of the year by multiplying the beginning balance by the
semiannual interest rate ($12,000 X 2% = $240). Add this interest to the starting balance to find how
much money Walt will have in the account at the beginning of the second half of the year ($12,000 +
$240 = $12,240). Multiply this new balance by the semiannual interest to find the interest earned during
the second half of the year ($12,240 X 2% = $244.80). Finally, add this interest to the balance at the
beginning of the second half of the year to determine how much money will be in the account in one
year's time ($12,240 + $244.80 = $12,484.80).
SOURCE: FI:061
SOURCE: Burton, S., & Shelton, N. (2005). Practical math applications (2nd ed.) [pp. 345-346]. Mason,
OH: South-Western Cengage Learning.
Test 1025
MATH APPLICATIONS IN BUSINESS – KEY
19
26. A
$37,240. Usually, the homeowner selling the home pays the closing costs, rather than the homebuyer.
Sometimes, though, buyers like Cindi are responsible for covering the expenses for the purchase
transaction. To determine how much money Cindi needs to take to the closing table, first divide her down
payment by 20% to determine the purchase price of the home ($32,000 ÷ 20% = $160,000). Next,
calculate the loan origination fee by multiplying the purchase price by the rate of the origination fee
($160,000 X 2% = $3,200). Finally, add together the down payment, loan origination fee, and remaining
closing costs ($32,000 + $3,200 + $275 + $640 + $775 + $350 = $37,240).
SOURCE: FI:063
SOURCE: Hanson, M. (2010). Business math (17th ed.) [pp. 208-210]. Mason, OH: South-Western
Cengage Learning.
27. B
$144.17. To find how much she should save each month, first determine how much birthday money she
can put toward the car by multiplying the amount that she usually receives each year by the number of
years she has to save ($400 X 3 = $1,200). Next, subtract her birthday money for the three years from
the cost of the car ($6,390 - $1,200 = $5,190). Finally, divide the difference by 36 months (3 years) to
determine how much she needs to save each month to reach her financial goal ($5,190 ÷ 36 = $144.17).
SOURCE: FI:065
SOURCE: ABCs of Investing. (2008-2009). Setting financial planning goals. Retrieved September 24,
2009, from http://www.abcsofinvesting.net/setting-financial-planning-goals/
28. D
$8,100. To calculate how much car money Ben will have in 75 weeks, first figure his annual income by
multiplying his monthly income by the number of months in the year ($2,600 X 12 = $31,200). Next,
divide his annual income by the number of weeks in the year to find his weekly income ($31,200 ÷ 52 =
$600). Then, determine how much he saves per week by multiplying his weekly income by 18% ($600 X
18% = $108). Finally, multiply the amount that he saves per week by the number of weeks that he plans
to save his money ($108 X 75 = $8,100).
SOURCE: FI:066
SOURCE: Hanson, M. (2010). Business math (17th ed.) [pp. 343-345]. Mason, OH: South-Western
Cengage Learning.
29. A
$540.14. To calculate Heidi's gross pay for the week, first multiply her standard hours by her regular
hourly wage ($9.56 X 40 = $382.40). Next, multiply her hourly wage by 1.5 to determine her time-and-ahalf wage ($9.56 X 1.5 = $14.34). Multiply her time-and-a-half wage by the number of weekday overtime
hours ($14.34 X 3 = $43.02). Th en, multiply her regular hourly wage by two to find her weekend hourly
wage ($9.56 X 2 = $19.12). Multiply her weekend hourly wage by the number of weekend hours worked
($19.12 X 6 = $114.72). Finally, add together her pay for her regular 40 hours, her overtime time for three
extra hours of work on Wednesday, and her double-time pay for her work on Saturday ($382.40 + $43.02
+ $114.72 = $540.14).
SOURCE: FI:068
SOURCE: Brechner, R. (2009). Contemporary mathematics for business and consumers: Annotated
instructor's edition (5th ed.) [pp. 286-287]. Mason, OH: South-Western Cengage Learning.
30. B
$3,411.53. To calculate his net deposit, first multiply the denominations of currency that he is depositing
by the number of bills or coins of that denomination that he has (2 X $100 = $200; 3 X $50 = $150; 43 X
$0.10 = $4.30). Then, add together the check, tax refund, and cash that he is depositing ($788.23 +
$2,319 + $200 + $150 + $4.30 = $3,461.53). Determine the amount of cash that he is getting back by
multiplying the number of bills that he is receiving by the denomination of the bills (5 X $10 = $50).
Finally, subtract his cash back from his total deposit ($3,461.53 - $50 = $3,411.53).
SOURCE: FI:560
SOURCE: Hanson, M. (2010). Business math (17th ed.) [pp. 87-89]. Mason, OH: South-Western
Cengage Learning.
Test 1025
MATH APPLICATIONS IN BUSINESS – KEY
20
31. B
Star Bank. To determine which financial institution would charge Brynn the least amount of interest over
the life of the loan, it is necessary to calculate the amount of interest charged by each institution, using
the exact interest method. Because the exact interest method uses 365 days as the denominator for the
time factor, divide the length of each loan by 365 (120 ÷ 365 = 0.3287671; 90 ÷ 365 = 0.2465753; 100 ÷
365 = 0.2739726; 150 ÷ 365 = 0.4109589). Next, multiply each time factor, expressed as a decimal, by
the corresponding interest rate and the principal amount for the loan ($12,000 X 7% X 0.3287671 =
$276.16; $12,000 X 4% X 0.2465753 = $118.36; $12,000 X 6.875% X 0.2739726 = $226.03; $12,000 X
9% X 0.4109589 = $443.84). The last thing to do is compare the number of dollars each institution would
require Brynn to pay over the life of the loan. Star Bank would charge Brynn the least amount of interest.
It would cost Brynn $118.36 to borrow $12,000 from Star Bank for 90 days at 4% interest.
SOURCE: FI:071
SOURCE: Brechner, R. (2009). Contemporary mathematics for business and consumers: Annotated
instructor's edition (5th ed.) [pp. 331-332]. Mason, OH: South-Western Cengage Learning.
32. C
$306.75. The first step in determining Josie's taxable income is adding together her gross income and
taxable interest ($27,510 + $765 = $28,275). This sum is her adjusted gross income. Then, subtract the
single standard deduction and exemption amount from her adjusted gross income ($28,275 - $3,650 $5,700 = $18,925). Next, determine her federal income tax for the year by multiplying her adjusted gross
income by her tax rate ($18,925 X 15% = $2,838.75). Finally, subtract the amount she has already paid
in taxes from the total amount of tax due ($2,838.75 - $2,532 = $306.75).
SOURCE: FI:074
SOURCE: Burton, S., & Shelton, N. (2005). Practical math applications (2nd ed.) [pp. 210-212]. Mason,
OH: South-Western Cengage Learning.
33. C
Debi. To determine the rate of commission charged by each advisor for a load mutual fund, subtract the
NAV from the offer price and then divide that difference by the offer price (Benjamin: $28.34 - $23.19 =
$5.15, $5.15 ÷ $28.34 = 0.1817 = 18.17%; Carl: $15.32 - $12.67 = $2.65, $2.65 ÷ $15.32 = 0.1730 =
17.30%; Debi: $38.90 - $35.98 = $2.92, $2.92 ÷ $38.90 = 0.0751 = 7.51%; Effy: $51.42 - $45.22 = $6.20,
$6.20 ÷ $51.42 = 0.1206 = 12.06%). By comparing the different rates of commission, we can see that
Debi is charging the lowest rate.
SOURCE: FI:076
SOURCE: Hanson, M. (2010). Business math (17th ed.) [pp. 308-311]. Mason, OH: South-Western
Cengage Learning.
34. B
7.58%. The net asset value of a mutual fund is the dollar value for one share of its stock. To find the net
asset value, first subtract the total liabilities from the total assets to calculate the fund's total value
($7,950,000 - $5,600,000 = $2,350,000). Then, divide the fund's total value by the number of shares
outstanding ($2,350,000 ÷ 31,000,000 = 0.0758 = 7.58%).
SOURCE: FI:274
SOURCE: Brechner, R. (2009). Contemporary mathematics for business and consumers: Annotated
instructor's edition (5th ed.) [pp. 758-759]. Mason, OH: South-Western Cengage Learning.
35. A
1.05%. A stock's current yield is a measure of the amount of last year's dividend as a percentage of the
stock's current price. To calculate the current yield on Macy's stock, divide last year's dividend per share
by the current price per share ($0.20 ÷ $18.99 = 0.0105318 = 1.05%).
SOURCE: FI:275
SOURCE: Brechner, R. (2009). Contemporary mathematics for business and consumers: Annotated
instructor's edition (5th ed.) [pp. 737-740]. Mason, OH: South-Western Cengage Learning.
Test 1025
MATH APPLICATIONS IN BUSINESS – KEY
21
36. B
$2.53. To find the dividend per share for the company's common stock, first multiply the number of
shares of preferred stock by the dividend amount per share of the preferred stock (40,000 X $1.25 =
$50,000). Next, subtract this amount, which is the portion of the total dividend that goes to preferred
stockholders, from the total dividend amount ($240,000 - $50,000 = $190,000). Finally, divide the
difference by the number of shares of common stock to determine how much dividend the company is
paying per share of common stock ($190,000 ÷ 75,000 = $2.53).
SOURCE: FI:077
SOURCE: Brechner, R. (2009). Contemporary mathematics for business and consumers: Annotated
instructor's edition (5th ed.) [pp. 735-737]. Mason, OH: South-Western Cengage Learning.
37. C
$20,000. Speculative risks are chances of loss that may result in loss, no change, or gain. When a
business takes a speculative risk, there is always the possibility of failure. Investing $20,000 in a new
venture represents a speculative risk because there is the possibility that the new venture will fail, and
the business will lose its entire investment. Businesses take the risk of investing in new ventures because
they hope to earn a profit. Investing in a savings account is not a speculative risk because the investment
is insured and guaranteed to earn interest. Buying equipment and office supplies are not examples of
speculative risks but of routine operating expenses.
SOURCE: FI:080
SOURCE: Meyer, E.C., & Allen, K.R. (2000). Entrepreneurship and small business management:
Teacher's manual (2nd ed.) [pp. 377-378]. New York: Glencoe/McGraw-Hill.
38. C
$106.16. Health coverage is a benefit some businesses offer their employees. The amount of the
coverage that the company pays varies from business to business. In Sara's case, her monthly premium
is $575 with 60% paid by the company. To determine Sara's portion of the coverage, multiply $575 by
40% (or .40) which equals $230. Multiply the monthly amount by 12 to obtain Sara's yearly cost: $230 X
12 = $2,760. Since Sara is paid every two weeks, she receives 26 paychecks in a year. To determine
how much Sara pays for her insurance coverage in each paycheck, divide the yearly amount by 26:
$2,760 ÷ 26 = $106.16.
SOURCE: FI:082
SOURCE: Hanson, M. (2010). Business math (17th ed.) [p. 280]. Mason, OH: South-Western Cengage
Learning.
39. D
$245,000. Businesses usually obtain property insurance to protect them from damage due to natural
disasters, vandalism, or accidents. Most insurance policies specify that the insurance company will pay
all or part of the cost of the damage less the deductible, which is the amount that the business agrees to
pay for any damage that may occur. To determine the settlement, first calculate 90% of the damage
($275,000 X 90% or .90 = $247,500). Then, subtract the amount of the deductible from that figure to
determine the final amount of the insurance settlement ($247,500 - $2,500 = $245,000).
SOURCE: FI:083
SOURCE: Business Owner's Toolkit. (1995-2009). Insuring your office and equipment. Retrieved
September 25, 2009, from
http://www.toolkit.com/small_business_guide/sbg.aspx?nid=P04_8100
40. D
$3,200. Net worth is the total value of the business. Net worth is calculated by subtracting total liabilities
from total assets ($4,250 - $1,050 = $3,200). Cash on hand and value of inventory are included in total
assets.
SOURCE: FI:085
SOURCE: FI LAP 5—Show Me the Money (Nature of Accounting)
Test 1025
MATH APPLICATIONS IN BUSINESS – KEY
22
41. C
$5,875. A business determines its total cash paid out by adding the total costs of goods to be sold,
variable expenses, and fixed expenses ($1,750 + $2,150 + $1,975 = $5,875). Monthly cash sales are
cash receipts which are monies flowing into the business. Receivables are funds the business will
receive in the future.
SOURCE: FI:091
SOURCE: FI LAP 6—Count the Cash (Cash Flow)
42. B
$7,400. A business's cash flow includes all the monies going into and out of a business during a certain
period of time. The cash flow includes monthly expenses such as salaries and operating expenses as
well as revenues from sales and investments. In this example, the monthly sales and income from
investments are added together to show how much money came into the company during that month
($30,000 + $1,150 = $31,150). From that figure, subtract the money that is going out of the company:
$31,150 - [$9,500 + $14,250] = $7,400 cash flow.
SOURCE: FI:092
SOURCE: Longenecker, J.G., Moore, C.W., & Petty, J.W. (2003). Small business management: An
entrepreneurial emphasis (12th ed.) [pp. 298-303]. Cincinnati: Thomson/South-Western.
43. D
$82,565. A balance sheet is a financial statement that captures the financial condition of the business at
a particular moment. One of the three main components of a balance sheet is the business's liabilities,
which are the debts that the business owes. Liabilities include items such as accounts payable, accrued
wages and salaries, income tax payable, long-term notes, and mortgages. To determine the business's
liabilities, add the amount owed in commissions, the amount payable in income tax, and the accounts
payable ($46,500 + $23,225 + $12,840 = $82,565). Depreciation is a reduction in the value of goods
occurring over a period of time. Depreciation is not a liability but a factor in determining the current value
of fixed assets such as equipment.
SOURCE: FI:093
SOURCE: Longenecker, J.G., Moore, C.W., & Petty, J.W. (2003). Small business management: An
entrepreneurial emphasis (12th ed.) [pp. 294-297]. Cincinnati: Thomson/South-Western.
44. B
$533,750. A profit-and-loss (income) statement is a business's financial picture for a certain period of
time. It includes revenue, cost of goods sold, gross profit, operating expenses, and net income/profit. The
formula for calculating gross profit is revenue minus cost of goods sold ($875,250 - $341,500 =
$533,750). Then, the business subtracts operating expenses from gross profit to determine net profit.
Advertising costs are included in operating expenses.
SOURCE: FI:094
SOURCE: FI LAP 4—Watch Your Bottom Line (Income Statements)
45. C
$2,726.67. To determine the average discount rate that the business would have to pay for a three-month
period, first multiply the amount of monthly sales times the discount rate to obtain the monthly discount
rate: $125,000 X 2% (or .02) = $2,500 for June; $136,000 X 2% (or .02) = $2,720 for July; and $148,000
X 2% (or .02) = $2,960. Next total the discount rate paid for the three-month period: $2,500 + $2,720 +
$2,960 = $8,180. Finally, divide the total discount rate paid by the number of months involved in the
scenario: $8,180 ÷ 3 = $2,726.67.
SOURCE: FI:040
SOURCE: Visa. (2009, April 18). Visa U.S.A. consumer credit interchange reimbursement fees.
Retrieved September 22, 2009, from http://usa.visa.com/download/merchants/april-2009visa-usa-interchange-rate-sheet.pdf
Test 1025
MATH APPLICATIONS IN BUSINESS – KEY
23
46. B
$42,500. In some situations, a bank will loan only a percent of the price of new equipment, and the
business must obtain additional capital in order to make the purchase. In this case, first calculate the
amount that the bank will loan ($250,000 X 75% or .75 = $187,500). The bank will loan $187,500, and
the business has $20,000 in available cash to put towards the purchase. Add those figures and subtract
the total from the purchase price to determine the amount of additional capital the business needs to
obtain ($187,500 + $20,000 = $207,500; $250,000 - $207,500 = $42,500).
SOURCE: FI:043
SOURCE: Business Owner's Toolkit. (1995-2009). Common types of bank loans. Retrieved September
25, 2009, from http://www.toolkit.com/small_business_guide/sbg.aspx?nid=P10_3300
47. A
$188,450. An operating budget predicts the amount of profit for a certain period of time, usually a year,
based on estimated total expenses and sales. If a business owner expects total expenses of $124,950
for the coming year and wants to gross $63,500 in profit (income before taxes), the business needs sales
of $188,450 ($124,950 + $63,500 = $188,450). If the business sells more than estimated, it will earn a
greater profit. A business owner uses the operating budget to track expenses and sales throughout the
year and makes changes, if necessary, in order to earn the desired amount of profit.
SOURCE: FI:098
SOURCE: Lighthouse International. (2008, November 24). How to build an operating budget for your
small business. Retrieved September 25, 2009, from http://www.esight.org/View.cfm?x=1036
48. C
$26,136. A budget is an estimate of income and expense for a specific period of time. A budget helps a
company or department to control spending, set goals, and prioritize activities. To calculate the amount
that the business plans to allocate to the next year's promotional budget, multiply the sales by six percent
($435,600 X 6% or .06 = $26,136).
SOURCE: FI:099
SOURCE: Everard, K.E., & Burrow, J.L. (2001). Business principles and management (11th ed.)
[pp. 395-396]. Cincinnati: South-Western.
49. C
$252,334. A sales forecast is an estimate of one company's anticipated sales in a market. To determine
the soup's sales forecast for Decatur County, divide the product's market potential by the number of
businesses in the market that will be selling the product: $3,785,000 ÷ 15 = $252,334. Each business,
therefore, could expect to sell approximately $252,334 of the soup. Naturally, a variety of factors will
influence the actual amount of soup each business sells, including advertising, pricing, customer loyalty,
etc.
SOURCE: FI:096
SOURCE: Analyzing your market's potential. (n.d.). Retrieved September 22, 2009, from
http://www.asbcentral.com/marketing%20pdf/potential.pdf
50. A
6.8%. The formula for determining inventory turnover is cost of goods sold divided by average
merchandise inventory ($374,000 ÷ $55,000 = 6.8 or 6.8%).
SOURCE: FI:097
SOURCE: Everard, K.E., & Burrow, J.L. (2001). Business principles and management (11th ed.)
[pp. 418-419]. Cincinnati: South-Western.
51. C
$127.00. Net profit is the money remaining after operating expenses are subtracted from gross profit, the
difference between the cost and the selling price. Thus, by subtracting the cost and the operating
expenses from the selling price, the net profit is determined ($625.00 + $67.50 = $692.50; $819.50 $692.50 = $127.00).
SOURCE: FI:102
SOURCE: Farese, L.S., Kimbrell, G., & Woloszyk, C.A. (2006). Marketing essentials (pp. 770-771). New
York: Glencoe/McGraw-Hill.
Test 1025
MATH APPLICATIONS IN BUSINESS – KEY
24
52. D
th
th
st
(5 ) $62.94, (18 ) $35.18, (31 ) $82.18. To maintain a petty cash fund, an authorized employee needs to
maintain a running tally of money deposited and withdrawn from the fund. To determine the balance of
the fund on the specified dates, add any deposits and subtract any withdrawals. The running tally is
shown in the petty cash log.
SOURCE: FI:310
SOURCE: Microsoft Office Online. (n.d.). Petty cash log. Retrieved September 24, 2009, from
http://office.microsoft.com/en-us/templates/TC010197951033.aspx?
CategoryID=CT101440991033
53. A
Three full-time and one part-time. To determine the number of billers needed, divide the number of
anticipated claims (35,000) by the industry benchmark of 10,000. That calculation indicates that 3½
billers will be needed. Rather than spend money unnecessarily by hiring four full-time billers, the practice
should conserve its assets by hiring one part-time employee.
SOURCE: HR:353
SOURCE: Schechter, K.S. (2009, April 6). How to calculate the right staffing for a smaller practice.
Retrieved September 22, 2009, from http://www.amaassn.org/amednews/2009/04/06/bica0406.htm
54. D
13.4. Jenny spent approximately 13.4% of her time with each of the five experienced applicants. To
determine the percentage of time spent with each of the experienced applicants, first multiply the minutes
spent with each experienced applicant by the number of experienced applicants (55 X 5 = 275 minutes).
Then, multiply how long Jenny spent with each recent college graduate by the number of applicants who
had recently graduated from college (45 X 3 = 135 minutes). Find the total number of minutes that Jenny
spent interviewing by adding together the time spent with each of the two types of applicants (275 + 135
= 410 minutes). Finally, divide the number of minutes spent with each experienced applicant by the total
number of minutes spent interviewing (55 ÷ 410 = 13.4%).
SOURCE: HR:355
SOURCE: Mathis, R.L., & Jackson, J.H. (2003). Human resource management (10th ed.) [pp. 252-260].
Cincinnati: Thomson/South-Western.
55. B
$52,125. A mean is the average of a set of numbers. To find the mean salary, first multiply the number of
salespeople earning a particular salary by the amount of the salary ($42,000 X 3 = $126,000; $54,000 X
2 = $108,000; $61,000 X 3 = $183,000). Next, add these amounts together to find the total salary of all
eight salespeople combined ($126,000 + $108,000 + $183,000 = $417,000). Finally, divide the total
salary by the number of salespeople to find their mean, or average, salary ($417,000 ÷ 8 = $52,125).
SOURCE: HR:390
SOURCE: Edkins, J. (2006). Mean, median, mode. Retrieved September 21, 2009, from
http://gwydir.demon.co.uk/jo/numbers/pictogram/box.htm
56. C
$208. To find the cost of selecting and hiring the new supervisor, first add together the time that members
of the H.R. department spent completing activities related to the hiring process (20 + 45 + 90 + 40 = 195
minutes). Next, divide the total in minutes by the number of minutes in an hour to convert the time to
hours (195 ÷ 60 = 3.25 hours). Finally, multiply the total time by the cost per hour to determine the total
cost of selecting and hiring the new supervisor (3.25 X $64 = $208).
SOURCE: HR:356
SOURCE: Hanson, M. (2010). Business math (17th ed.) [pp. 473-474]. Mason, OH: South-Western
Cengage Learning.
Test 1025
MATH APPLICATIONS IN BUSINESS – KEY
25
57. D
19.34. To determine the average number of employee complaints handled by the human resources
department, total the number of complaints handled annually (22 + 14 + 12 + 16 + 31 + 17 + 10 + 8 + 20
+ 26 + 32 + 24 = 232). Divide the total by 12—the number of months in the scenario: 232 ÷ 12 = 19.34.
SOURCE: HR:366
SOURCE: Hanson, M. (2010). Business math (17th ed.) [pp. 27-28]. Mason, OH: South-Western
Cengage Learning.
58. A
409 students. Sampling is the process of choosing a representative group of consumers to survey. To
determine the size of your sample, first add together the number of students at each of the four schools
(459 + 521 + 482 + 583 = 2,045). Then, multiply the total number of students by the percentage of the
total students that will be part of the sample (2,045 X 20% = 409 students).
SOURCE: IM:285
SOURCE: StatPac. (1997-2009). Sampling methods. Retrieved September 21, 2009, from
http://www.statpac.com/surveys/sampling.htm
59. B
2. Mode is the value or number that appears the most often. It is the response given by the most people.
In this example, 88 people responded that they attend the theater two times a year, which is the highest
response.
SOURCE: IM:416
SOURCE: Farese, L. S., Kimbrell, G., & Woloszyk, C. A. (2009). Marketing essentials (p. 171).
Woodland Hills, CA: Glencoe/McGraw-Hill.
60. D
19.48%. To determine the response rate, determine the number of usable surveys by adding together the
number of surveys that contained non-response errors and the number of surveys that were not returned:
3,125 + 3,800 = 6,925. To determine the number of usable surveys, subtract the total number of
unusable surveys from the number of surveys sent out: 8,600 - 6,925 = 1,675. Finally, divide the number
of usable surveys by the total number of surveys sent out: 1,675 ÷ 8,600 = 19.48%.
SOURCE: IM:292
SOURCE: Hanson, M. (2010). Business math (17th ed.) [pp. 444-446]. Mason, OH: South-Western
Cengage Learning.
61. C
$525,050. Adding items to the product line is one way for a business to increase its market share. To
determine how much additional revenue the company will make by increasing its market share, first
subtract the current market share percentage from the estimated market share percentage at the end of
the year to determine the percentage of market share increase for the year (30% - 20% = 10%). Then,
multiply the total industry sales by the percentage of increase to obtain the amount of additional revenue
the company estimates that it will gain from the new product line ($5,250,500 X .10 or 10% = $525,050).
SOURCE: MK:019
SOURCE: MK LAP 3— Just Do It…Right (Company Actions and Results)
62. C
$77,220,000. Market potential is the total amount of possible sales in a market. In this scenario, the
marketer would multiply the number of dogs times the average monthly amount spent on dog food:
143,000 X $45 = $6,435,000. Then, multiply that amount by 12 (the number of months in a year) to
obtain the dog food's annual market potential: $6,435,000 X 12 = $77,220,000.
SOURCE: MP:009
SOURCE: Analyzing your market's potential. (n.d.). Retrieved September 22, 2009, from
http://www.asbcentral.com/marketing%20pdf/potential.pdf
Test 1025
MATH APPLICATIONS IN BUSINESS – KEY
26
63. A
$128,000. When forecasting sales for next year, businesses consider the amount of sales generated by
their current customers. If sales are expected to remain the same, a business would forecast the same
volume from one year to the next. In this example, 60% of the 400 current customers spend an average
of $350 per year. Calculate that amount by multiplying the number of customers by the percent (400 X
60% or .60 = 240). The 240 customers spend $350 each for a total of $84,000 ($350 X 240 = $84,000).
Then, determine the 40% by multiplying that percent by the number of customers (400 X 40% or .40 =
160). The 160 customers spend $275 per year for a total of $44,000 ($275 X 160 = $44,000). Add the
two amounts to calculate next year's sales which will be the same as this year's figure ($84,000 +
$44,000 = $128,000).
SOURCE: MP:013
SOURCE: Ingram, T.N., LaForge, R.W., Avila, R.A., Schwepker, C.H., & Williams, M.R. (2001).
Professional selling: A trust-based approach (pp. 136-139). Mason, OH: South-Western.
64. C
1,911. One of the objectives of a marketing plan often is to attract more customers, which leads to an
increase in sales and revenue. When preparing its marketing plan, a business develops specific
objectives to follow that should be clear and measurable, such as increasing the number of customers by
4% this year and 5% next year. To determine the number of customers the business will have by the end
of next year if the marketing plan is successful, first determine the number of customers the business will
have this year by multiplying the current number of customers by the planned increase (1,750 X 4% or
.04 = 70). Add the new customers to the number of current customers (1,750 + 70 = 1,820). To
determine the increase for the next year, multiply the number of this year's customers by the planned
increase (1,820 X 5% or .05 = 91), and add the increase to the number of customers (1,820 + 91 =
1,911).
SOURCE: MP:018
SOURCE: Farese, L.S., Kimbrell, G., & Woloszyk, C.A. (2006). Marketing essentials (pp. 33-36). New
York: Glencoe/McGraw-Hill.
65. A
15,970.58 kilobytes. Although there is some debate about how many kilobytes are equal to a megabyte,
most computer experts agree that one megabyte equals 1,024 kilobytes. To determine how many
kilobytes of space the six files will use, first convert the two files that are currently measured in
megabytes to kilobytes (3.87 megabytes X 1,024 kilobytes per megabyte = 3,962.88 kilobytes; 4.3
megabytes X 1,024 kilobytes per megabyte = 4,403.2 kilobytes). Then, add together the sizes of the six
files (66.5 + 497 + 2,141 + 4,900 + 3,962.88 + 4,403.2 = 15,970.58 kilobytes).
SOURCE: NF:081
SOURCE: Brain, M. (1998-2009). How bits and bytes work. Retrieved September 23, 2009, from
http://computer.howstuffworks.com/bytes3.htm
66. C
1,812. E-mail is a quick way to communicate business information. The forward function allows the user
to send an existing e-mail message to another person. To calculate how many people received Logan's
e-mail message, first multiply the number of coworkers to whom Logan sent the original message by the
number of people to whom the coworkers forwarded the message (12 X 10 = 120). Then, multiply that
total by 15 to obtain the total number of people who received the e-mail message (120 X 15 = 1,800).
Add the original 12 recipients to this number to obtain the total number of people who received the
message (1,800 + 12 = 1,812).
SOURCE: NF:004
SOURCE: About.com. (n.d.). How to forward e-mails. Retrieved September 24, 2009, from
http://email.about.com/od/howtoforwardemails/How_to_Forward_Emails.htm
Test 1025
MATH APPLICATIONS IN BUSINESS – KEY
27
67. A
1 hour, 48 minutes. To determine how long Patrick's slideshow is, first determine its length in seconds by
multiplying the number of slide by the amount of time devoted to each slide (72 X 90 seconds = 6,480
seconds). Then, determine the number of seconds in an hour by multiplying the number of seconds in
each minute by the number of minutes in an hour (60 X 60 = 3,600 seconds per hour). Finally, divide the
total length of the slideshow in seconds by the number of seconds in an hour (6,480 ÷ 3,600 = 1.8 hours).
To convert 0.8 hours to minutes, multiply 0.8 hours by the number of minutes in an hour (0.8 X 60 = 48
minutes). So, his slideshow is 1 hour, 48 minutes long.
SOURCE: NF:008
SOURCE: Epson America, Inc. (2009). Timing automatic PowerPoint presentations. Retrieved
September 21, 2009, from http://www.presentersonline.com/tutorials/powerpoint/timing.shtml
68. B
700. Businesses often analyze the information in customer databases to determine the method by which
customers make their purchases. This information helps businesses to decide if they should promote
certain methods in order to increase sales. To determine the number of customers who made purchases
online, first calculate the percent of customers who purchased through a catalog or in person (28% +
37% = 65%). Then, subtract that figure from 100% to determine the percent of customers who purchased
online (100% - 65% = 35%). Multiply the total number of customers by 35% to determine the number of
customers who purchased online (2,000 X 35% or .35 = 700).
SOURCE: NF:185
SOURCE: Farese, L.S., Kimbrell, G., & Woloszyk, C.A. (2002). Marketing essentials (3rd ed.) [p. 509].
Woodland Hills, CA: Glencoe/McGraw-Hill.
69. A
1,955. Businesses keep customer records to measure and track sales. A business that has a customerloyalty program must track the number of items each customer orders to be able to provide the free item.
To determine how many lattés the business sold in relation to its customer-loyalty program, first multiply
the number of customers by the number of free lattés they received to obtain the total number of free
lattés each group of customers received (46 X 3 = 138; 32 X 4 = 128; 25 X 5 = 125). Then, add together
each group's total lattés to obtain the total of free lattés the business provided during the year (138 + 128
+ 125 = 391). Finally, multiply the number of free lattés the business provided during the year by the
number of purchased lattés required to get the free latté. This provides the total number of lattés sold in
relation to the customer-loyalty program during the year (391 X 5 = 1,955).
SOURCE: NF:002
SOURCE: Soloman, M. R., Marshall, G. W., & Stuart, E. W. (2008). Marketing: Real people, real
choices (5th ed.) [p. 112]. Upper Saddle River, NJ: Pearson Prentice Hall.
70. D
$28,070. To determine the total cost, first multiply the length of the fence by the cost per foot calculate
how much the fencing without the gates costs (1,800 X $15 = $27,000). Then, add the costs of two gates
to the cost of the fencing ($27,000 + $535 + $535 = $28,070).
SOURCE: OP:157
SOURCE: CostHelper.com. (2009). How much does a fence cost? Retrieved September 24, 2009, from
http://www.costhelper.com/cost/home-garden/fences-good-neighbor-fences.html
71. C
$700.49. An invoice is the formal, printed record of a sale that includes all necessary information as to
the buyer, the seller, items purchased, amounts, prices, delivery date, credit or discount terms, etc. To
determine the total amount due on Brian's invoice, first calculate his discount by multiplying the gross
amount due by the percentage that is normally deducted from his bill ($844.90 X 20% = $168.98). Next,
subtract the discount from the gross amount due ($844.90 - $168.98 = $675.92). Finally, add the
shipping charges to the amount due after the discount ($675.92 + $24.57 = $700.49).
SOURCE: OP:015
SOURCE: Hanson, M. (2010). Business math (17th ed.) [pp. 427-429]. Mason, OH: South-Western
Cengage Learning.
Test 1025
MATH APPLICATIONS IN BUSINESS – KEY
28
72. B
218. To calculate the reorder point, divide the number of bottles of shampoo sold by the number of
working days to determine the salon's daily usage: 1,700 ÷ 28 = 61 bottles sold daily. Then, multiply that
number by the lead time of three days: 61 X 3 = 183, and add the safety stock: 183 + 35 = 218 reorder
point. When the inventory of shampoo gets to 218, it's time for Hair & Nails to place a reorder.
SOURCE: OP:016
SOURCE: Hanson, M. (2010). Business math (17th ed.) [p. 490]. Mason, OH: South-Western Cengage
Learning.
73. B
Vendor X. Chanel plans to pay the vendor approximately four weeks, which is equal to 28 days, after the
invoice date (4 X 7 = 28 days). To select a vendor, first identify the discount that each vendor would give
for a payment made 28 days after invoice (W: 1%, X: n, Y: 3%, Z: 2.5%). Next, multiply Chanel's original
purchase price by the discount each vendor is offering to find the amount of her discount; then, subtract
that discount from the original price (W: $975 X 1% = $9.75, $975 - $9.75 = $965.25; X: $975 X 0% = $0,
$975 + $0 = $975; Y: $975 X 3% = $29.25, $975 - $29.25 = $945.75; Z: $975 X 2.5% = $24.38, $975 $24.38 = $950.62). Finally, add each vendor's shipping charges to Chanel's amount due (W: $965.25 +
$12.50 = $977.75; X: $975 + $0 = $975; Y: $945.75 + $32.10 = $977.85; Z: $950.62 + $24.75 =
$975.37). So, if Chanel plans to purchase an average of $975 per order and pay for the order
approximately four weeks after the invoice date, Vendor X would charge her the least amount of money.
SOURCE: OP:161
SOURCE: Burton, S., & Shelton, N. (2005). Practical math applications (2nd ed.) [pp. 263-265]. Mason,
OH: South-Western Cengage Learning.
74. A
23.2%. A trade discount is a deduction from the list price of goods. Manufacturers and vendors may offer
trade discounts to channel members who agree to perform certain marketing activities on behalf of the
manufacturer or vendor. To determine the trade discount rate, first subtract the net price from the list
price ($87,900 - $67,500 = $20,400). Then, divide this difference by the list price for the jeans ($20,400 /
$87,900 = 0.232 = 23.2%).
SOURCE: OP:337
SOURCE: Brechner, R. (2009). Contemporary mathematics for business and consumers: Annotated
instructor's edition (5th ed.) [pp. 212-215]. Mason, OH: South-Western Cengage Learning.
75. C
69,120. An important aspect of a keeping a production line running efficiently is to have the materials or
parts on hand to make the products, which requires planning and making the appropriate purchases. To
determine how many 3/8" nickel-plated flat head screws the manufacturer will need for 30 days, first
multiply the number of screws needed per vacuum cleaner by the number of vacuum cleaners produced
in an hour, which provides the number of screws needed per hour (6 X 32 = 192). Then, multiply the
number of screws needed per hour by the number of hours the production line operates per day to obtain
the number of screws needed per day (192 X 12 = 2,304). Finally, determine the total number of screws
needed for 30 days, by multiplying the number of screws needed per day by 30 (2,304 X 30 = 69,120).
SOURCE: OP:017
SOURCE: BA LAP 1—Nature of Production
76. D
4,935. To determine how many defects the company will fi nd per year, first multiply the current number of
defects identified daily by the expected decrease, expressed as a percentage (26 X 48% = 12.48
defects). So, 12.48 fewer products will be defective per day. Subtract the drop in defects from the current
daily defects (26 - 12.48 = 13.52 defects). Finally, multiply the number of expected defects per day after
new procedures are put in place by the number of days in the year (13.52 X 365 = 4,934.8 = 4,935).
SOURCE: OP:164
SOURCE: Brechner, R. (2009). Contemporary mathematics for business and consumers: Annotated
instructor's edition (5th ed.) [pp. 183-186]. Mason, OH: South-Western Cengage Learning.
Test 1025
MATH APPLICATIONS IN BUSINESS – KEY
29
77. D
$47,650. A fixed cost is the sum of all the expenses incurred by a business that usually remain at the
same level no matter how many units of a product are produced or marketed. Fixed costs include rent,
salaries, insurance, utilities, and other expenses that remain about the same from one year to the next.
Employee bonuses and money spent on special advertising campaigns are a type of variable costs
because they usually change depending on the profitability of the business and the amount it has
available for other activities. To determine the amount that the business should predict for next year's
fixed costs, add this year's expenses for rent, insurance, and utilities ($36,000 + $7,500 + $4,150 =
$47,650).
SOURCE: OP:024
SOURCE: Brechner, R. (2009). Contemporary mathematics for business and consumers: Annotated
instructor's edition (5th ed.) [pp. 250-251]. Mason, OH: South-Western Cengage Learning.
78. A
$3,975. Employees can help businesses control expenses by charging all customers the correct amount.
Giving employee discounts to friends is a type of theft that costs businesses thousands of dollars each
year. In this example, calculate the loss to the company by multiplying the value of goods sold to friends
by the employee discount ($26,500 X 15% or .15 = $3,975).
SOURCE: OP:025
SOURCE: Tarasoff, F. (n.d.). Reducing the employee theft epidemic. Retrieved September 26, 2009,
from http://www.evancarmichael.com/Retail/3869/Reducing-the-Employee-TheftEpidemic.html
Hanson, M. (2010). Business math (17th ed.) [p. 59]. Mason, OH: South-Western Cengage
Learning.
79. B
$404. A breakeven point is the level of sales at which revenues equal total costs. Breakeven analysis is a
financial analysis whose purpose is to identify the level of sales needed to reach the break-even point at
various prices. To determine the difference in breakeven points using the two different prices, first
calculate the breakeven point at each price. To determine the breakeven point at $250 for three hours of
music, subtract the variable costs for the timeframe from the price ($250 - $62 = $188). Then, divide the
fixed costs by the difference between the price and the variable costs to find the breakeven point in units
($4,300 ÷ $188 = 22.87 three-event hours). Then, to calculate the breakeven point in dollars, multiply the
breakeven point in units by the sales price per three-hour event (22.87 X $250 = $5,718). Repeat the
process to determine the breakeven point in dollars at $325 per three-hour event ($325 - $62 = $263;
$4,300 ÷ $263 = 16.35 three-hour events; 16.35 X $325 = $5,314). Finally, subtract the breakeven point
at the $325 price from the breakeven point at $250 ($5,718 - $5,314 = $404).
SOURCE: OP:192
SOURCE: Hanson, M. (2010). Business math (17th ed.) [pp. 387-389]. Mason, OH: South-Western
Cengage Learning.
80. B
$1,400. Businesses often purchase service contracts on expensive equipment that they intend to keep
for a long time. In this example, the business is purchasing a five-year contract for a total price of $5,500
plus a per-copy charge. To determine how much the business will pay the first year, divide the base price
by the length of the contract ($5,500 ÷ 5 = $1,100). The business makes 15,000 copies the first year at a
cost of $.02 per copy for an additional charge of $300 (15,000 X .02 = $300). Add the two amounts to
determine the cost of the service contract for the first year ($1,100 + $300 = $1,400).
SOURCE: OP:027
SOURCE: Business Owner's Toolkit. (1995-2009). Service contracts. Retrieved September 25, 2009,
from http://www.toolkit.com/small_business_guide/sbg.aspx?nid=P06_4488
Test 1025
MATH APPLICATIONS IN BUSINESS – KEY
30
81. B
$2,405. Businesses often expand and need more space. Also, rent often increases on a yearly basis.
In this example, the business will be leasing additional space next year and will be paying more for the
space. To calculate next year's monthly rent, first calculate the cost increase by multiplying the percent of
increase by the current rate ($2.50 X 4% or .04 = $.10). Add the increase to the current rent ($2.50 +
$ .10 = $2.60). The business will lease an additional amount of space (800 + 125 = 925). Multiply next
year's monthly rate by that amount of space to determine the monthly rent (925 X $2.60 = $2,405).
SOURCE: OP:028
SOURCE: Business Owner's Toolkit. (1995-2009). Lease provisions. Retrieved September 25, 2009,
from http://www.toolkit.com/small_business_guide/sbg.aspx?nid=P04_3010
82. A
$460. Many businesses control expenses by hiring part-time employees at an hourly rate instead of
salaried, full-time employees. The advantage to the business is the same number of employees working
during a given time period but for less wages. To calculate the savings, first determine the weekly payroll
expense for one part-time employee by multiplying the number of hours worked each week by the hourly
rate ($11.50 X 20 =$230). Then, multiply that amount by the four part-time employees ($230 X 4 = $920);
and the total weekly amount by the two-week pay period ($920 X 2 = $1,840). Next, determine what the
payroll would be for two full-time employees by multiplying the weekly salary by the number of employees
and that amount by the two-week pay period ($575 X 2 = $1,150; $1,150 X 2 = $2,300). Then, subtract
the two-week, part-time payroll from the two-week, full-time payroll to determine the amount the business
will save ($2,300 - $1,840 = $460).
SOURCE: OP:029
SOURCE: BizMove.com. (n.d.). How to reduce costs. Retrieved September 25, 2009, from
http://www.bizmove.com/finance/m3k.htm
83. C
$2,221. Businesses compare the amounts budgeted for sales and expenses to the actual figures in order
to determine if the business is performing as expected or if adjustments need to be made. In this
example, the business's actual sales decreased over what was budgeted while the percent of that
amount spent on expenses increased. However, the dollar amount spent on expenses actually
decreased. To determine the decrease in monthly expenses over what was budgeted, first calculate the
amount of expenses in the original budget by multiplying the sales figure by the percent of expenses
($175,500 X 55% or .55 = $96,525). Next, calculate the amount actually spent on expenses by
multiplying the actual sales figure by the actual percent of expenses ($168,400 X 56% or .56 = $94,304).
Then, subtract actual expenses from budgeted expenses to determine the amount that the expenses
decreased ($96,525 - $94,304 = $2,221).
SOURCE: OP:030
SOURCE: Longenecker, J.G., Moore, C.W., & Petty, J.W. (2003). Small business management: An
entrepreneurial emphasis (12th ed.) [pp. 300-307]. Cincinnati: Thomson/South-Western.
84. A
Fair Value Accounting, Internal Control, and The Sarbannes-Oxley Act. Many businesspeople are
required to complete continuing education courses to maintain their certifications and licensures. To
determine which three courses would be the least expensive for Randy to purchase, first determine how
much each of the Credit for Accountants courses would be after the discount. To do this, multiply the cost
of a Credit for Accountants course by the discount offered ($129.95 X 15% = $19.49). Next, subtract this
amount from the full price for such a course ($129.95 - $19.49 = $110.46). So, to spend the least amount
of money for three classes, Randy should complete Fair Value Accounting for $109.95 and Auditing
Developments and The Sarbannes -Oxley Act for $110.46 each.
SOURCE: PD:033
SOURCE: American CPE, Inc. (1999-2009). Accounting and auditing CPE courses. Retrieved
September 21, 2009, from
http://www.americancpe.com/Merchant2/merchant.mvc?Screen=ACCTG&Store_Code=ACI
Test 1025
MATH APPLICATIONS IN BUSINESS – KEY
31
85. A
$32,760. To determine Eddie's new annual income, first determine the amount of his raise by multiplying
his original hourly wage by the raise expressed as a percentage ($15.00 X 5% = $0.75). Next, add his
raise to his original wage ($15.00 + $0.75 = $15.75). Find his weekly income by multiplying his new
hourly wage by the number of hours he works per week ($15.75 X 40 = $630.00). Finally, multiply his
weekly income by the number of weeks in the year to calculate his new annual income ($630.00 X 52 =
$32,760).
SOURCE: PD:034
SOURCE: Brechner, R. (2009). Contemporary mathematics for business and consumers: Annotated
instructor's edition (5th ed.) [pp. 183-186]. Mason, OH: South-Western Cengage Learning.
86. B
$.50. Operating expenses and profit are added to the cost of each item. The cost of one item is found by
dividing 12 into $3.60 = $.30 cost. Then, add the operating expenses ($.09) and desired profit ($.11) to
the cost to obtain the selling price per item ($.50).
SOURCE: PI:002
SOURCE: Hanson, M. (2010). Business math (17th ed.) [pp. 438-440]. Mason, OH: South-Western
Cengage Learning.
87. C
$3,646.40. To calculate the total amount of Marcus's bill, first add together the cost of the HDTV and the
two-year warranty: $3,200 + (2 X $120) = $3,440. Next, determine the dollar amount of the sales tax by
multiplying the sales tax rate by the total cost of the items: $3,420 X 6% (or .6) = $206.40. And finally,
add the amount of tax to the cost of the items to obtain the amount of Marcus's bill: $3,440 + $206.40 =
$3,646.40.
SOURCE: PM:020
SOURCE: Hanson, M. (2010). Business math (17th ed.) [p. xxxviii]. Mason, OH: South-Western
Cengage Learning.
88. B
9. Stock turnover is the number of times stock is sold in a given period of time. The formula for
calculating stock turnover is the number of battery packages sold divided by the average number of
battery packages in stock (6,183 ÷ 687 = 9).
SOURCE: PM:224
SOURCE: McCalla, P. (2005). Retailing (p. 127). Woodland Hills, CA: Glencoe/McGraw-Hill.
89. B
1,080. When determining the number of sets of carving knives to buy for next year, an online cookware
store would consider last year's sales as well as sales so far this year. If sales have been increasing by
20% for the last year or so and are expected to continue at that rate, the store would plan for that amount
of increase next year. In this example, sales are expected to increase 20% over last year from 750 sets
to 900 sets. If that rate continues next year, the store will need to purchase 20% more sets of knives. To
calculate that amount, multiply the number expected to be sold this year by the percent of increase
expected for next year (900 X 20% or .20 = 180). Then, add that number to the number for the current
year (900 + 180= 1,080).
SOURCE: PM:261
SOURCE: Dunne, P., Lusch, R., & Griffith, D. (2002). Retailing (4th ed.) [pp. 320-329]. Mason, OH:
South-Western.
Test 1025
MATH APPLICATIONS IN BUSINESS – KEY
32
90. B
$242.10. Many companies offer discounts to businesses to encourage those businesses to choose them
as their vendors. If all other factors are equal, businesses frequently choose vendors based on the
amount of discount that is offered. In this case, a 6% discount gives the business a savings of $242.10.
Calculate the discount by adding last year's cost of the office supplies and paper products ($2,680 +
$1,355 = $4,035), and multiplying that amount by the percent of discount offered by the new vendor
($4,035 X 6% or .06 = $242.10).
SOURCE: PM:263
SOURCE: Meyer, E.C., & Allen, K.R. (2000). Entrepreneurship and small business management:
Teacher's manual (2nd ed.) [pp. 255-257]. New York: Glencoe/McGraw-Hill.
91. D
3,240. To determine how many sales result from the banner ad, first multiply the number of people who
see the ad by the percentage who go to the company's site (1,800,000 X 3% = 54,000). This tells us that
54,000 people visit the site as a result of the banner ad. Next, multiply the number of site visitors by the
percentage of those people who purchase J.J. Jenkins' products (54,000 X 6% = 3,240).
SOURCE: PR:100
SOURCE: Burrow, J.L. (2006). Marketing: Instructor's wraparound edition (2nd ed.) [p. 445]. Mason,
OH: Thomson/South-Western.
92. A
$1,850. To determine how much the nine advertising spots would cost, first multiply the number of
morning, lunchtime, and rush hour spots that you want by the cost of each ($225 X 4 = $900; $175 X 2 =
$350; $200 X 3 = $600). Then, add together these subtotals for the different categories of advertising
spots ($900 + $350 + $600 = $1,850).
SOURCE: PR:007
SOURCE: Gaebler Ventures. (2001-2009). Entrepreneurs: Radio advertising rates. Retrieved
September 21, 2009, from http://www.gaebler.com/Radio-Ad-Rates.htm
93. C
4%. Click-through is the act of clicking on an Internet advertisement and being transported to the
advertiser's web page. Evaluating click-through rates helps advertisers evaluate effectiveness and
placement of the advertisement. To determine the click-through rate, divide the number of click-throughs
by the total number of impressions or exposures (18,000 ÷ 450,000 = .04 or 4%).
SOURCE: PR:164
SOURCE: Farris, P. W., Bendle, N. T., Pfeifer, P. E., & Reibstein, D. J. (2006). Marketing metrics: 50+
metrics every executive should master (pp. 291-292). Upper Saddle River, NJ: Wharton
School Publishing.
94. C
10. Planning appropriate food portions is an important aspect of planning a catered event. To determine
how many cookies Olivia should order, first determine the total number of cookies needed by multiplying
the number of guests by the number of cookies each guest will consume (180 X 2 = 360). Then,
determine the number of cookies each platter contains by multiplying three by the numerical amount of a
dozen (3 X 12 = 36). Then divide the total number of cookies needed by the number of cookies each
platter contains to obtain the number of platters that Olivia should order (360 ÷ 36 = 10).
SOURCE: PR:360
SOURCE: Mill, R.C. (2001). Restaurant management: Customers, operations, and employees (2nd ed.)
[p. 211]. Upper Saddle River, NJ: Prentice Hall.
95. D
6%. Businesses measure the response rates to determine the effectiveness of their promotional efforts.
To determine the infomercial's response-rate as a percentage, divide the number of respondents by the
total number of people exposed to the infomercial (30,000 ÷ 500,000 = .06 or 6 %).
SOURCE: PR:257
SOURCE: Davis, J. (2007). Measuring marketing: 103 key metrics every marketer needs (pp. 201-204).
Hoboken, NJ: John Wiley & Sons.
Test 1025
MATH APPLICATIONS IN BUSINESS – KEY
33
96. A
$3,000. To figure Marina's total cost before taxes for the ski-trip package and her extended
accommodations, add together the costs of the ski-trip package, the airfare, and the lodging: $2,300 +
$450 + ($125 X 2) = $3,000.
SOURCE: SE:478
SOURCE: Hanson, M. (2010). Business math (17th ed.) [p. 418]. Mason, OH: South-Western Cengage
Learning.
97. D
$278.18. To calculate the total of the sales transaction, first calculate the extension prices for each item
(3 X $21.95 = $65.85; 24 X $4.60 = $110.40; 4 X $11.95 = $47.80; 6 X $6.50 = $39.00). Then, add
together the extension prices to obtain the sales transaction subtotal ($65.85 + $110.40 + $47.80 +
$39.00 = $263.05). To calculate the sales tax dollar amount, multiply the subtotal dollar amount by the
tax percentage rate ($263.05 X .0575 or 5.75% = $15.125 or $15.13). Finally, add together the subtotal
dollar amount and the sales tax to obtain the total amount of the sales transaction ($263.05 + $15.13 =
$278.18).
SOURCE: SE:329
SOURCE: Brechner, R. (2009). Contemporary mathematics for business and consumers: Annotated
instructor's edition (5th ed.) [p. 650]. Mason, OH: South-Western Cengage Learning.
98. D
$568.58. To determine the amount of the guest's hotel bill, add together the room costs for the first two
nights: $175 + $175 = $350. Then, determine the discounted amount of the guest's hotel bill $175 X 85%
(or .85) = $148.75. Add the amount of the discounted night to the previous subtotal: $148.75 + $350 =
$498.75. Now, multiply the gross amount of the bill by the sales tax rate: $498.75 X 14% (or .14) =
$69.83. Finally, add the dollar amount of the sales tax to the gross amount of the bill to obtain the guest's
total bill: $498.75 + $69.83 = $568.58.
SOURCE: SE:149
SOURCE: Burton, S., & Shelton, N. (2005). Practical math applications (2nd ed.) [p. 261]. Mason, OH:
South-Western Cengage Learning.
99. D
$45,000. Entrepreneurs analyze the trading area when developing a business plan to obtain geographic,
demographic, and economic information that will be useful in planning the business. One type of
information that is important is the average family income in the area because new businesses want to
locate in areas that have sufficient income to purchase their products. To calculate the average income in
this example, first add each yearly income ($50,000 + $60,000 + $40,000 + $30,000 = $180,000). Then,
divide the total by four because there are four equal groups (25%) of families ($180,000 ÷ 4 = $45,000).
SOURCE: SM:013
SOURCE: Farese, L.S., Kimbrell, G., & Woloszyk, C.A. (2002). Marketing essentials (3rd ed.)
[pp. 641-642]. Woodland Hills, CA: Glencoe/McGraw-Hill.
100. C
97.2%. Businesses analyze their operating results in relation to budget estimates in order to determine
how well they are doing compared to projections. Comparing actual sales to projected sales is important
because it indicates if a business will earn the desired amount of profit. In order to determine relationship
between actual and projected sales, divide actual sales by projected sales ($85,500 ÷ $88,000 = .9715 or
.972). Convert that figure to a percentage by multiplying by 100 (.972 X 100 = 97.2). In this example,
actual monthly sales are 97.2% of budgeted sales. The business might use this information to make
changes in order to increase sales to reach the budgeted level.
SOURCE: SM:005
SOURCE: Louderback, J.G., & Holmen, J.S. (2003). Managerial accounting (10th ed.) [p. 420]. Mason,
OH: South-Western.