Please help with this question: "Your company has a turnover of $30 million per year...."

[Mastema]

Hi all,

I managed to work out the first part but i don't understand how to do the second part. Maths is my weakest subject. Can someone go through or explain how the second part works.

Thank you for your time.

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Your company has a turnover of $30 million per year. Following aggressive cost-cutting by the new CEO, profits are a healthy 5%.

Your department was allocated 4% of profits as the security budget for the coming year.

Question A. How much in $ is your budget for the coming year?

Answer:
Question A.

30,000,000 (Turnover) x 5% (profit in percent) = 1,500,000 (profit in numbers)
1,500,000 x 4% (security budget) = $60,000

The security budget in the coming year is $60,000.

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However, the CEO now believes some of the cost cutting has gone too far and he wants a security guard 24/7 at the site. YA reliable local contractor can provide the required service for $50k per annum.

Question B. What extra sales need to be generated to pay for this service?

Be sure to show your working for both parts of the task.

 

[Deleted member 4993]

Hi all,

I managed to work out the first part but i don't understand how to do the second part. Maths is my weakest subject. Can someone go through or explain how the second part works.

Thank you for your time.

--------------------

Your company has a turnover of $30 million per year. Following aggressive cost-cutting by the new CEO, profits are a healthy 5%.

Your department was allocated 4% of profits as the security budget for the coming year.

Question A. How much in $ is your budget for the coming year?

Answer:
Question A.

30,000,000 (Turnover) x 5% (profit in percent) = 1,500,000 (profit in numbers)
1,500,000 x 4% (security budget) = $60,000

The security budget in the coming year is $60,000.

----------------------------------------------------------------------
However, the CEO now believes some of the cost cutting has gone too far and he wants a security guard 24/7 at the site. YA reliable local contractor can provide the required service for $50k per annum.

Question B. What extra sales need to be generated to pay for this service?

Be sure to show your working for both parts of the task.

What % of the new(extra) profit will be channeled towards security?

 

[HallsofIvy]

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However, the CEO now believes some of the cost cutting has gone too far and he wants a security guard 24/7 at the site. YA reliable local contractor can provide the required service for $50k per annum.

Question B. What extra sales need to be generated to pay for this service?

Be sure to show your working for both parts of the task.

Let X be the "extra sales". Profit is 5% of sales so profit on that "extra sales" is 0.05X. The security division gets 4% of the profit so the security division gets 0.04(0.05X)= 0.002X. You want that to equal $50,000. Solve 0.002X= 50000.