If the Other costs category increases by 40%, how much would profits for PanPan Noodle House be, assuming that all other items do not change?

If the Other costs category increases by 40%, how much would profits for PanPan Noodle House be, assuming that all other items do not change?

• A. $60,000
• B. $70,000
• C. $80,000
• D. $90,000

Answer: (C)

When profits depend on revenue minus costs, changing only one cost category while everything else stays the same shifts the profit by that change in costs. A 40% increase in Other costs adds 0.40 times the original Other costs to total costs, so profits drop by that amount. If the problem’s numbers provide an initial profit and the size of the Other costs, you can see the new profit as: new profit = original profit − 0.40 × (Other costs). For instance, with an initial profit of 120,000 and Other costs of 100,000, the rise in costs would be 40,000, bringing profits down to 80,000. That aligns with the given answer. So, the correct result reflects that a 40% rise in a single cost category reduces profits by 40% of that category’s original amount, assuming all other factors stay constant.

When profits depend on revenue minus costs, changing only one cost category while everything else stays the same shifts the profit by that change in costs. A 40% increase in Other costs adds 0.40 times the original Other costs to total costs, so profits drop by that amount.

If the problem’s numbers provide an initial profit and the size of the Other costs, you can see the new profit as: new profit = original profit − 0.40 × (Other costs). For instance, with an initial profit of 120,000 and Other costs of 100,000, the rise in costs would be 40,000, bringing profits down to 80,000. That aligns with the given answer.

So, the correct result reflects that a 40% rise in a single cost category reduces profits by 40% of that category’s original amount, assuming all other factors stay constant.