Question 3 - Math

Hello!

You need to multiply the 5 percentage points by 3, given that they say the cost / revenue ratio would decrease by 5 percentage points for each prep item, and then they mention that they would take out 3 prep items (so 5 p.p. * 3 = 15 p.p.). Same with sales, they would decline by 10% for each prep item, so they would decline by 10% * 3 = 30% total.

Hope this helps!

Maria

Hey there, 

The 5% reduction in cost / revenue ratio is per item. So since we are removing 3 items, it is 3 x 5% = 15% reduction in cost / revenue ratio. That's why the new ratio becomes 45% - 15% = 30%

The same concept holds with the 10% reduction in sales per day. The 10% reduction corresponds with 30 pizzas per day per item, so since the question says we will be reducing 3 items, it means a total reduction of 90 pizzas. Therefore it is 210 pizza sales per day

Hope that helps!

All the best

You have it here: "New cost/revenue ratio = 45% – ( 3 * 5%) = 30%"

Gross margin is reduced 5% per item, so it goes from 45% to 30%, not from 45% to 40%.