Food cost $1,800 and labor cost is $2,200, if sales are $7,500. What is the prime cost percentage?

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Multiple Choice

Food cost $1,800 and labor cost is $2,200, if sales are $7,500. What is the prime cost percentage?

Explanation:
Prime cost percentage is found by adding food cost and direct labor, then dividing by sales. Here, prime cost = 1,800 + 2,200 = 4,000. Then 4,000 ÷ 7,500 = 0.5333..., which is 53.3%. So the prime cost ratio is 53.3%. The other numbers would require different prime-cost totals: 50% would be 3,750; 60% would be 4,500; 46.7% would be 3,500.

Prime cost percentage is found by adding food cost and direct labor, then dividing by sales. Here, prime cost = 1,800 + 2,200 = 4,000. Then 4,000 ÷ 7,500 = 0.5333..., which is 53.3%. So the prime cost ratio is 53.3%.

The other numbers would require different prime-cost totals: 50% would be 3,750; 60% would be 4,500; 46.7% would be 3,500.

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