The following table shows the expansion expenses of a business. Calculate the product growth costs of expansion.
| | |
| :------------------- | :---------------------------- |
| **Expansion Expenses** | |
| **Product Growth** | |
| Focus Groups | 40 people at $150/person |
| Inventory Expenses | 20% on $220,000 value |
| New Equipment | $205,000 |
| **Building Growth** | |
| Architect | $13,000 |
| Attorneys | $52,000 |
| Bankers | $100,000 |
Product Growth Costs = $[?]
Answer (2)
Calculate the cost of Focus Groups: 40 × $150 = $6000 .
Calculate the Inventory Expenses: 0.20 × $220 , 000 = $44 , 000 .
Identify the cost of New Equipment: $205,000.
Sum the costs to find the total Product Growth costs: $6 , 000 + $44 , 000 + $205 , 000 = $255 , 000 .
Explanation
Understanding the Problem We are given a table of expansion expenses for a business, categorized into Product Growth and Building Growth. Our objective is to calculate the total Product Growth costs. The Product Growth expenses include Focus Groups, Inventory Expenses, and New Equipment. We need to sum these costs to find the total Product Growth costs.
Calculating Focus Groups Cost First, we calculate the cost of Focus Groups. The problem states that 40 people are participating in focus groups at a cost of $150 per person. Therefore, the total cost for Focus Groups is: 40 × $150 = $6000
Calculating Inventory Expenses Next, we calculate the Inventory Expenses. The problem states that the inventory expenses are 20% of the $220,000 value. Therefore, the total Inventory Expenses are: 0.20 × $220 , 000 = $44 , 000
Identifying New Equipment Cost The cost of New Equipment is directly given as $205,000.
Calculating Total Product Growth Costs Finally, we sum the costs of Focus Groups, Inventory Expenses, and New Equipment to find the total Product Growth costs: Product Growth Costs = Focus Groups Cost + Inventory Expenses + New Equipment Cost Product Growth Costs = $6,000 + $44,000 + $205,000 Product Growth Costs = $255,000
Final Answer Therefore, the total Product Growth Costs are $255,000.
Examples
Imagine you are starting a small business and need to understand how much money you are spending on growing your product line versus improving your building. Calculating product growth costs, like we did here, helps you understand exactly how much of your investment is going towards making your product better. This is crucial for making informed decisions about where to allocate your resources, ensuring that you're investing wisely in the areas that will drive the most growth for your business. By carefully tracking these expenses, you can optimize your spending and maximize your return on investment.
The total Product Growth Costs for the business expansion amount to $255,000. This was calculated by summing the costs of Focus Groups ($6,000), Inventory Expenses ($44,000), and New Equipment ($205,000).
;
