Business Mathematics Brief 12th Edition by Stanley Salzman ,Gary Clendenen, Charles Miller

Exercise 8

Complete the following. If there is no operating loss or absolute loss, write "none." (See Examples.)
Determining a Profit or a Loss
Appliance Giant paid $1600 for a 60-inch LCD flat-panel HDTV. If operating expenses are 30% of cost and the television is sold for $2000, find the amount of profit or loss.

SOLUTION
Operating expenses are 30% of cost.

The break-even point for the LCD HDTV is

So, the company makes a profit if the television is sold for more than the $2080 break-even point or incurs a loss if sold for less. Since the selling price is $2000, there is a loss, found as follows.

The $80 loss is an operating loss, since the selling price is less than the break-even point but greater than the cost.
The calculator solution to this example follows.

Determining the Operating Loss and the Absolute Loss
A ping pong table that normally sells for $360 at Dick's Sporting Goods is marked down 30%. If the cost of the game table is $260 and the operating expenses are 20% of cost, find (a) the operating loss and (b) the absolute loss.
SOLUTION
(a)

(b) The absolute or gross loss is the difference between the cost of the table and the selling price.