John Owen Owns a Drugstore That Is Experiencing Significant Growth $$\begin{array} { | c | c | } \hline \text { Quarter } & ( \$ 000 ) \\\hline 1 & 240 \\2 & 180 \\3 & 220 \\4 & 260 \\\hline\end{array}$$

question 76

Multiple Choice

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.
$$\begin{array} { | c | c | } \hline \text { Quarter } & ( \$ 000 ) \\\hline 1 & 240 \\2 & 180 \\3 & 220 \\4 & 260 \\\hline\end{array}$$
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

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Definitions:

Mesoderm

The middle layer of an embryo in early development, from which most of the body's tissues and structures are derived, including muscle, bone, and the circulatory system.

Ectoderm

The outermost of the three primary germ layers in the embryo, giving rise to the nervous system, skin, and various other tissues and organs.

Mesoderm

The mesoderm is the middle layer of an embryo in early development, giving rise to the musculoskeletal, circulatory, and other systems.

Thyroid

A gland in the neck that produces hormones regulating metabolism, growth, and development of the human body.