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BUSINESS MATH STUDY GUIDE 2nd SEMESTER FINAL CHAPTER 6 Lesson 1 Simple Interest Simple Interest = Principal x Rate x Time (I=PRT) Amount Owed Principal + Interest If TIME does not = years ie Months / 12 Months (remember to use 3 #’s after the decimal) Lesson 2 Monthly Interest Rate Principal x Rate = Interest Interest + Principal = Amount Owed New Amount Owed Carries to Next MonthRepeat process 3 times Semi-Annual Interest Rate (2 times a year) Principal x Rate = Interest Interest + Principal = Amount Owed New Amount Owed Carries to Next Semi Annual Term Repeat process 2 times Quarterly Interest Rate (4 times a year) Principal x Rate = Interest Interest + Principal = Amount Owed New Amount Owed Carries to Next QuarterRepeat process 4 times **When solving for amount owed if the Rate is an ANNUAL RATE and the problem asks you to change that to a Monthly Rate / 12 months, to a Semi Annual Rate / 2 terms, to a Quarterly Rate / 4 quarters Lesson 3 Total Assets Inventory + Receivables + Real Estate + Equipment + Cash = Total Assets Line of Credit Total Assets x % of Assets = Line of Credit Lesson 4 Total Revenue Cash Sales + Receivables + Other Income = Total Revenue per Month Total Expenses Inventory + Payroll + Maintenance + Rent + Marketing + Interest = Total Expenses Difference Total Revenue – Total Expenses = Difference Cash Flow Same as Difference (if the number is negative put it in brackets, if it’s positive just re-write #) Lesson 5 Product Payments Check Processing Fees Dishonored Check Fees Personnel Cost to Process Checks Cash Transactions Counterfeit Monies Cost of Credit Transactions CHAPTER 7 Lesson 1 Ratio Employee Salaries over Total Income = Ratio Percent Employee Salaries / Total Income = Percent (%) Lesson 2 Total Square Foot Needed Senior Manager, Director, Manager, Staff (Area x Number) Senior Manager Sq Ft + Director Sq Ft + Manager Sq Ft + Staff Sq Ft = Total Employee Sq Ft Senior Managers + Directors + Managers + Staff = Total # of Employees Lunchroom Area + Other Common Areas = Total Area Available to All Employees Total # of Employees x Total Area Available to All Employees = Total Common Area Sq Ft Total Employee Sq Ft + Total Common Area Sq Ft = Total Sq Ft Needed Lesson 3 Monthly Transportation Expense Add Per Mile Costs Gas Per Mile + Maintenance Per Mile + Depreciation Per Mile = Mileage Costs Average Monthly Mileage x Mileage Costs = Total Mileage Costs # of Cars x Insurance Per Car = Total Insurance Costs Total Mileage Costs + Total Insurance Costs = Monthly Transportation Expense Transportation Budget Turn fraction into decimal by dividing = % of Operating Expenses Operating Expense Budget x % of Operating Expense = Transportation Budget CHAPTER 8 Lesson 1 Cost of Production Fixed Costs = Always stay the same ie RENT Variable Costs = Vary from month to month ie Water Bill Total Costs = Fixed Costs + Variable Costs Lesson 2 Total Marketing Expenses Local TV + Magazines + Newspapers + Radio + City Special Events + Customer Happiness Rep = Total Marketing Expense Total Marketing Expense / Total Sales = % of Sales for Marketing Lesson 3 Total Value Inventory x Unit Cost = Total Value Add Total Value Column to get TOTALS Average Cost of Inventory TOTALS / Total Inventory = Average Cost of Inventory Value of Inventory Average Cost of Inventory x # of Units in Stock = Value of Inventory Average Inventory Beginning Inventory + Ending Inventory = Total Inventory Total Inventory / 2 = Average Inventory Lesson 4 Net Sales Sales – Less Sales Returns and Allowances = Net Sales Merchandise Available for Sale Merchandise Inventory + Plus Purchases = Merchandise Available for Sale Cost of Goods Sold Merchandise Available for Sale – Less Merchandise = Cost of Goods Sold Gross Profit Net Sales – Cost of Goods Sold = Gross Profit Net Income Before Tax Gross Profit – Total Operating Expenses = Net Income Before Tax Change Base Year – Current Year = Change (If Base Yr is lower = Positive Change; Base Yr is higher than current year = Negative Change- Negative Change goes in brackets) Percent Change Change / Base Year = % Change CHAPTER 9 Lesson 1 Total Monthly Premium Fire Theft Ins. + General Liability Ins. + Auto Ins. + Workers Compensation = Total Monthly Premium Total Annual Premium Total Monthly Premium x 12 Months = Total Annual Premium Lesson 2 Annual Premium Cost of Coverage per $10,000 x Coverage = Total Coverage Amount Total Coverage Amount / $10,000 = Annual Premium Total Premium for Car Insurance Bodily Injury Amount + Property Damage Amount + Comprehensive Deductible Amount + Collision Deductible Amount + Medical Amount = Total Premium for 1 Vehicle Total Premium for 1 Vehicle x # of Vehicles = Total Premium for Car Insurance **1/2% = .005 as a decimal Lesson 3 Cost to Insurance Company Death Payment – Cash Value = Cost to Insurance Company Actual Cost per $1,000 Coverage Cost to Insurance Company / $1,000 = Cost per $1,000 Coverage Annual Premium / Cost per $1,000 Coverage = Actual Cost per $1,000 Coverage Total Premiums Monthly Premium x 12 Months = Annual Premium Annual Premium x # of Years of Policy Term = Total Premiums CHAPTER 10 Lesson 1 Installation System Total Costs Collection Unit + Filter + Fan = Total Cost for 1 System Total Cost for 1 System x # of Systems = Total Installation System Cost **.1% = .001 as a decimal Lesson 2 Total Cost for Concrete Volume = Length x Width x Height / 2 (V=lwh/2) (Length, Width, Height must be like terms) Length x Width x Height = Volume Volume / 2 = Total Cubic Feet Total Cubic Feet / 27 Cubic Feet (27 Cubic Feet = 1 Cubic Yard) = Total Cubic Yards Total Cubic Yards Round Up to a Whole # Total Cubic Yards as a Whole # x Cost of Concrete per Yard = Total Cost for Concrete Total Cost of Handrails # of Posts x Height of Posts x Costs of Posts = Total Post Costs Number of Caps x Cost of Caps = Total Cap Costs Amount of Railing x Cost of Railing = Total Railing Costs # of Welder’s Hours x Cost Per Hour = Total Wages Total Post Costs + Total Cap Costs + Total Railing Costs + Total Wages = Total Handrail Costs Total Cost of Doors Height and Width must be like terms (must equal inches) Height (inches) x Width (inches) = Total Area Total Area x Cost per Sq Inch = Total Cost of Doors in Inches If cost is in feet Total Area / 144 (144 sq inches in 1 sq foot) = Total Area in Feet Total Area in Feet x Cost per Sq Foot = Total Cost of Doors in Feet Lesson 3 Fuel Tax Miles Driven per State / MPG = Gallons Gallons x Cost per Gallon (Varies per State) = Total Fuel Tax per State Add Fuel Taxes for all Listed States State Mileage Percent Annual State Mileage / Total Annual Mileage = State Mileage Percent Fee Paid to State State Mileage Percent x Apportioned Plate Fee = Fee Paid to State Lesson 4 CIF (Sum of the Cost of Goods + Insurance + Freight) Number of Items x Average Cost per Item = Total Cost of Items Total Cost of Items + Insurance + Freight = CIF Tariff CIF x Tariff % = Tariff Percent Increase Current Price of Item – Original Price of Item = Price Increase Price Increase / Base Price = Percent Increase CHAPTER 11 Lesson 1 New Price Original Price + Percent Increase = New Price Consumer Price INDEX Current Period Average Price / Base Period Average Price = Base Period Index Base Period Index x 100 = Consumer Price INDEX Lesson 2 Average Yield per Acre Add 4 Years of Bushel Production = Total Production Total Production / 4 = Average Yield per Acre Guaranteed Payment # of Bushels per Acre Average Yield per Acre x 50% = Guaranteed Payment # of Bushels per Acre Total Insurance Payment Guaranteed Payment # of Bushels per Acre – Bushels per Acre Produced = Bushels per Acre Paid by Insurance Market Price per Bushel x 60% = Insurance Payment per Bushel Insurance Payment per Bushel x Bushels per Acre Paid by Insurance = Insurance Payment per Acre Insurance Payment per Acre x # of Acres = Total Insurance Payment Increase per Dr. Office Visit Malpractice Insurance Premium Increase / # of Patients Seen per Year = Increase per Dr. Office Visit CHAPTER 12 Lesson 1 Gross Profit per Item Selling Price per Item – Cost per Item = Gross Profit per Item Number of Sales Monthly Operating Expense / Gross Profit per Item = Number of Sales Operating Costs Plus 10 % Growth Monthly Operating Expense + 10% = Operating Cost Plus 10% Growth Lesson 2 Inquiries Divide Small # First to get a Percentage (%) Employees Needed per Hour Visitors per Hour x Time with Each Visitor = Total Time (Minutes) Total Time / 60 Minutes = Employees Needed per Hour (Must be a whole # Round Up) Lesson 3 Advertising Cost per Sale Divide Fraction of Readers Who Buy = Decimal Decimal x Magazine Distribution = # of Items Sold Cost of Advertising / # of Items Sold = Advertising Cost per Sale Amount of Profit Sales x Profit as a Percent of Sales = Amount of Profit Maximum Amount for Effective Advertising Amount of Profit x Percent of Profit from New Sales = Maximum Amount for Effective Advertising Effective If Maximum Amount for Effective Advertising is MORE than Cost of Marketing Plan = Yes If Maximum Amount for Effective Advertising is LESS than Cost of Marketing Plan = No CHAPTER 13 Lesson 1 Cost per Catalog Cost per Picture + Cost per Description = Cost of Picture & Description Total Cost of Picture & Description x # of Pictures & Descriptions = Total Cost of Pictures & Descriptions Total Cost of Pictures & Descriptions + Designing Cost + Mailing Cost = Total Cost Total Cost / Catalogs Mailed = Cost per Catalog Phone Charges Determine if the plan is PER MINUTE or PER FRACTION OF A MINUTE PER MINUTE Round Up to Next Whole Minute PER FRACTION OF A MINUTE Take Seconds / 60 Seconds = Minutes as a Fraction Phones x Cost per Phone = Phone Charges Average Call Time x Charge per Minute x # of Calls = Minute Charges Phone Charges + Minute Charges = Total Phone Bill Lesson 2 Shipping Charges Total Cost of Purchase x Shipping % = Shipping Charge Compare Shipping Charge to Flat Rate Higher Value is Correct Answer Shipping Do NOT include Sundays! Lesson 3 Total Cost of Processing and Handling Locate Box Size based on Dimensions Given in Problem = Cost for 10 Boxes Cost for 10 Boxes / 10 = Cost for 1 Box Packing Material Cost x Packing Material Sq Ft = Total Packing Material Cost Labor Time MUST = Hours Labor Time in Minutes / 60 Minutes = Hours Hours x Labor Wage = Total Labor Wage Cost for 1 Box + Total Packing Material Cost + Total Labor Wage = Total Cost of Handling and Processing Lesson 4 Volume Volume = Length x Width x Height (V=lwh) Length, Width & Height Must be Like Terms To Put Inches into Feet Inches / 12 Inches = Feet Cost for 30 Days Volume x Cubic Feet per Day x 30 Days = Cost for 30 Days