Change in compensation is reason for the increased profits

Assignment Help Business Economics

Reference no: EM13995871

Recently, the owner of a Trader Joe’s franchise decided to change how she compensated her top manager. Last year, she paid him a fixed salary of $65,000 and her store made $130,000 in profits (not counting payment to her top manager). She suspected the store could do much better and feared the fixed salary was causing her top manager to shirk on the job. Therefore, this year she decided to offer him a fixed salary of $35,000 plus 16% of the store’s profits. Since the change, the store is performing much better, and she forecasts profits this year to be $270,000 (again, not counting the payment to her top manager). Assuming the change in compensation is the reason for the increased profits, and that the forecast is accurate, how much more money will the owner make (net of payment to her top manager) because of this change?

Reference no: EM13995871

Questions Cloud

Creation of the north american free trade agreement : Ross Perot, a former presidential candidate of the Reform Party, which was a third political party in the United States, had strongly objected to the creation of the North American Free Trade Agreement (NAFTA), which nonetheless was inaugurated in 19..

Offered the alternative of receiving either : Suppose you are offered the alternative of receiving either $3000 at the end of five years or P dollars today. There is no question that the $3,000 will be paid in full (no risk). Because you have no current need for the money, you would deposit the ..

Why are older people considered an at risk population : Why are older people considered an at risk population? What are the potential hazards manifested in later adulthood? Describe local programs in your area which address the needs for the elderly.

How does the health of economy affect your financial health : How does the health of the economy affect your financial health? How healthy is the U.S. economy right now? On what measures do you base your judgments? How will your appreciation of the big picture help you in planning for your future?

Change in compensation is reason for the increased profits : Recently, the owner of a Trader Joe’s franchise decided to change how she compensated her top manager. Last year, she paid him a fixed salary of $65,000 and her store made $130,000 in profits (not counting payment to her top manager). Assuming the ch..

Expectations in a class or under-performed : Describe a time in your life where you outperformed your expectations in a class or under-performed in relation to your expectations. What did you do that helped you succeed? What could you have done that would have made your performance better?

The process engineer at strow bridge metal works : The process engineer at Strow bridge Metal works has the choice of machining a particular part on either of two machines. Orders for this part re received regularly, but the order size varies. When the order is processed on machine A, four sequential..

Take with regard to the counterfeiting issue : The United Nations Security Council, the main decision-making body at the UN, is comprised of five regular members: China, France, the Russian Federation, the United Kingdom and the United States. Ten more members are elected from the General Assembl..

Examine changes in aggregate demand and aggregate supply : Analyze the business cycle. What are the determinants of aggregate demand? Examine changes in aggregate demand and aggregate supply, using the data from Step 1 and Step 2. How do these changes affect the business cycle?

User Account

All Pages