Widget Company Sells Widgets for $20

question 63

Essay

Widget Company sells widgets for $20.00 each.The manufacturing costs, all variable, are $6 each.The company is planning on renting an exhibition booth, for both display and selling purposes, at the annual candy convention.The company's sales manager will earn a vacation bonus if she can earn a target net income of $150,000, for the sales operation at the convention.The convention organizers provide the advertising and guarantee a certain level of traffic, in exchange for 15% of the net income.The 15% surcharge operates like a tax on net income.The company absorbs all of the fixed costs of production for the sales made at the convention.How many widgets does the sales manager have to sell to earn the vacation bonus?

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Definitions:

Annual Dividend

The regular payment made by a corporation to its shareholders, often expressed as a fixed amount per share that is distributed annually.

Downsizing Mode

A corporate strategy involving the reduction of a company's size, typically through layoffs, to reduce costs and improve efficiency.

Dividends

The portion of a company's profits distributed to shareholders, typically in the form of cash payments or additional shares.