Change in compensation is the reason for increased profits

Assignment Help Business Economics

Reference no: EM131073822

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 $70,000 and her store made $140,000 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 $32,000 plus 16% of the store’s profits. Since the change, the store is performing much better, and she forecasts profits this year to be $260,000 (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: EM131073822

Questions Cloud

Great deal of time and money developing mission statements : Little empirical evidence indicates that having a formal, written mission statement improves a firm's performance. Yet many firms spend a great deal of time and money developing mission statements. Why?

Identify two personal liberties : If in agreement, identify two personal liberties that people should be willing to sacrifice. If in disagreement, identify two personal liberties that people should not be willing to sacrifice.

Discuss the difference between negligence : Discuss the difference between negligence and an intentional torts. Analyze and evaluate the various issues presented while arguing and debating the connections between business, law, politics, and ethics.

Act rationally with an aim to maximize utility : Most economists A. apply the assumption that people behave as if they act rationally with an aim to maximize utility. B. apply the assumption that people rarely behave as if they act rationally although they do aim to maximize utility. C. rely on see..

Change in compensation is the reason for 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 $70,000 and her store made $140,000 in profits (not counting payment to her top manager). Assuming the c..

Internal strengths and weaknesses : Colleges and universities, like all business, have strengths, weaknesses, and competitors. What would you consider to be an online university's internal strengths and weaknesses?

Provide executive summary on the maroochy shire sewage spill : Provide a one page executive summary on the Maroochy Shire Sewage Spill case study. Your summary should not exceed one single-spaced page and should include Who, What, When, Where, Why and How the situation could have been handled.

Process of predicting future conditions : Forecasting is a process of predicting future conditions, that will influence and guide the activities, behavior and performance of the organization. What are some of the forecasting techniques organizations may utilize?

The stock market react to different interest rate changes : Discuss current and recent interest rates. Some possible discussion topics are the following: What has been the trend of interest rates over the last 1 mth, 6mths, 12 mths, 24 mths, 5 years? What has the FED been doing with interest rates? How does t..

User Account

All Pages