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Question
John Owen owns a drugstore that is experiencing significant growth. Owen is trying to decide whether to expand its capacity, which currently is $200,000 in sales per quarter. Sales are seasonal. Forecasts of capacity requirements, expressed in sales per quarter for the next year, follow.
| Quarter | ($000) |
| 1 | 240 |
| 2 | 180 |
| 3 | 220 |
| 4 | 260 |
Owen is considering expanding capacity to the $250,000 level in sales per quarter. The before-tax profit margin from additional sales is 15 percent. How much would before-tax profits increase next year because of this expansion?
A) less than $15,000
B) more than $15,000 but less than $16,000
C) more than $16,000 but less than $17,000
D) more than $17,000
Answer
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Related questions
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Q:
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Q:
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14
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11
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12
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22
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13
15 7
10
12 8
8
13