Use the Information Below to Answer the Following Question(s)

question 41

Multiple Choice

Use the information below to answer the following question(s) :
A retailer operating a network of home improvement stores has annual sales of $800 million,
annual cost of goods and materials purchased of $500 million,and net income of $125 million.
-What should the new annual sales be to have the same effect on the bottom line as a 15-percent reduction in the cost of goods and materials purchased,other things remaining unchanged?

• A)$500 million
• B)$800.75 million
• C)$1.280 billion
• D)$1.5 billion

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Definitions:

Economies Of Scale

The reduction in cost per unit of goods or services produced as the scale of output increases.

World Price

The international market price of a commodity, determined by global supply and demand conditions.

Per-Unit Tariff

A specific tax levied on each unit of a good imported into a country, as opposed to a percentage of the value.

Imported Good

A product or service brought into one country from another country in a legitimate fashion, typically for use in trade.