A Company Has Variable Costs That Are 1/8 the Value

question 32

Multiple Choice

A company has variable costs that are 1/8 the value of their sales revenues. Total net income for the most recent period was a profit of $50 400 and sales were $500 000. The company has started a new marketing campaign that they hope will increase sales, but it will require additional advertising of $15 000. How many sales dollars does the company have to generate in order to remain at the same level of profitability as before the new ad campaign?

• A) $517 142.86
• B) $387 100.00
• C) 392 100.00
• D) $387 100.86
• E) 392 100.86

---

Definitions:

Job Enlargement

The process of adding more tasks of similar difficulty to an employee's job role to increase job diversity.

Labour Specialization

The division of labor where individual workers specialize in doing part of a task or job, leading to increased efficiency and productivity.

Specialized Tools

Tools designed for specific tasks or functions, often used to improve efficiency and performance in particular applications.

Labour Costs

Expenses related to compensating employees for their work, including wages, benefits, and any associated taxes.