Decided to change how she compensated her top manager

Assignment Help Business Economics

Reference no: EM131003467

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 $55,000 and her store made $115,000 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 $27,000 plus 16% of the store’s profits. Since the change, the store is performing much better, and she forecasts profits this year to be $250,000 (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: EM131003467

Questions Cloud

During the industrial revolution : During the industrial revolution:

Determine the minimum number of subintervals : Determine the minimum number of subintervals that should be used to guarantee that the trapezoid method approximation of (1) is accurate to within 0.001 of the exact value of (1).

Analysis of the great depression : Essay Question: Summarize Keynes’ analysis of the Great Depression and the specific actions that would correct the sustained economic downturn. What actions were taken?

Human resource, political, and symbolic frames : Throughout the course you have been analyzing a specific situation you have encountered, using the Structural, Human Resource, Political, and Symbolic Frames to analyze what happened in your personal case.

Decided to change how she compensated her top manager : 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 $55,000 and her store made $115,000 in profits (not counting payment to her top manager). She suspected t..

Identify the substitution effect of the price change : Consider three agents with the respective utility functions: uA(x,y)= xy (MRS(x,y)= y) x uB (x, y) = x + y (perfect substitutes) uC (x, y) = min{x, y} (perfect complements) Assume each agent has income $120 and initially faces the prices px = $1 and ..

An increase in interest rate makes all households worse off : Because of diminishing returns to consumption, a household would be less than twice as happy if nominal income and nominal prices all doubled. an increase in the interest rate makes all households worse off. if a household is neither borrowing nor le..

What is the most critical risk for any project : What methods other than the ones described in your text can you suggest for identifying project risks? What other methods can you use to assess those risks? Which group of risks (internal, external) is more critical to a project and why?What is the m..

Based on how taxable income is determined : Based on how taxable income is determined, how might temporary differences be created between taxable income and pretax income in the income statement?

User Account

All Pages