John Owen Owns a Drugstore That Is Experiencing Significant Growth

question 81

Multiple Choice

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

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Definitions:

Lower-Level Objectives

Specific, measurable goals set at a lower hierarchy within an organization, aimed at supporting higher-level strategic objectives.

Quantify

To measure or express something as a numerical value.

Verifiable Work Activities

Tasks or duties that can be proven or confirmed through evidence or testimony to have been completed.

Management By Objectives (MBO)

A strategic management model that aims to improve the performance of an organization by clearly defining objectives that are agreed upon by both management and employees.