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John Owen Owns a Drugstore That Is Experiencing Significant Growth

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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.
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.    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
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?

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Definitions:

GE/McKinsey Grid

A strategic tool used for portfolio analysis, helping businesses prioritize their investments among different business units or product lines.

Business Strength

The distinct advantages or capabilities a company has that give it a competitive edge in the market.

BCG Matrix

A strategic analysis tool that helps organizations prioritize their business units or products by categorizing them into four types based on market growth and market share: Stars, Cash Cows, Question Marks, and Dogs.

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