Vitoro restaurant made a sale of One hundred thousand naira (N100,000). The amount spent on ingredient for preparing the meal was Twenty-five thousand naira...

Answer Details

First set out the given figures. Sales (income) = N100,000. Cost of ingredients (food cost) = N25,000. Wages paid to staff (labour) = N40,000. Rent and utility bills (overhead) = N15,000.

(a) Overhead cost and labour cost

• Overhead cost = rent and utility bills = N15,000. Overheads are the running expenses of the business that are not the food itself or direct wages.
• Labour cost = wages paid to members of staff = N40,000.

(b) Net profit

Net profit is what remains from sales after all costs have been deducted.

Total costs = ingredients + labour + overhead = N25,000 + N40,000 + N15,000 = N80,000.

\[ \text{Net profit} = \text{Sales} - \text{Total costs} = 100{,}000 - 80{,}000 = N20{,}000 \]

(c) Percentage net profit

This expresses the net profit as a percentage of sales.

\[ \text{Percentage net profit} = \frac{\text{Net profit}}{\text{Sales}} \times 100 = \frac{20{,}000}{100{,}000} \times 100 = 20\% \]