A Company Uses Graduated First-Dollar-Of-Profits Formula for Their Profit-Sharing Plans

question 11

Multiple Choice

A company uses graduated first-dollar-of-profits formula for their profit-sharing plans.They choose to share 4% of the first $10 million of after-tax profits and 7% of the after-tax profits in excess of that level.If this company's after-tax profit were $15 million last year,how much of this profit would be distributed to the employees?

• A)$1,200,000
• B)$1,000,000
• C)$750,000
• D)$600,000

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Definitions:

Fixed Costs

Expenses that do not change with the level of production or sales, such as rent or salaries.

Monopolizing

The practice of gaining exclusive control over a commodity or service in a particular market, limiting competition.

Alcoholic Drink

A beverage containing ethanol, commonly known as alcohol, which has psychoactive effects.

Sales Presentation

The actual presentation of the sales message to the prospect.