Company A and Company B are awarded a $42,000 project that is to be divided between the companies in the ratio of 4:3. How much money should each company receive?
Explanation
Answer: A - Company A gets $24,000 and Company B gets $18,000.
To solve this problem, first deal with the ratio to find how many “parts” are involved; in this case, 4+3 = 7. So, the $42,000 divided into 7 parts is equal to $6,000 per part. Company A gets 4 parts or $24,000 and Company B gets 3 parts or $18,000.
Key takeaway: Portions are not always divided equally, so it is important to know how to calculate ratios. Ratios are closely related to fractions. In the above example, think of Company A receiving 4 of the 7 parts (4/7) and Company B receiving 3 of the 7 parts (3/7). All you have to determine is how much 1 part is.
