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 herstore made $120,000 in profits (not counting payment to her top manager). She suspected the store could do much better and feared the fixed salary was causingher top manager to shirk on the job. Therefore, this year she decided to offer him a fixed salary of $28,000 plus 15% of the store's profits. Since the change, the storeis performing much better, and she forecasts profits this year to be $260,000 (again, not counting the payment to her top manager). Assuming the change incompensation is the reason for the increased profits, and that the forecast is accurate, how much more money will the owner make (net of payment to her topmanager) because of this change?$Does the manager make more money under the new payment scheme?Yes

STORE PROFITS=$1,20,000 Manager salary, fixed=$55000Manager salary, variable =0manager salary…

Answered: Recently, the owner of a Trader Joe's…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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