Question

A firm has a rule that they will hire a new secretary at $45,000 per year for every three managers. If each manager if paid $60,000 per year plus 50% of the gross revenue they generate for the firm, how much gross revenue does the firm expect each manager to generate if the firm also expects to retain $10,000 per year per manager for general expenses?

Answer 1

ANSWER:

We will have to equate general expenses of three manger plus the slary of the secretary to the 50% of the groos revenuw generated by the 3 managers.

salary of secretary = $45,000 per year

general expenses per manager = $10,000

general expense for 3 managers = 3 * $10,000 = $30,000

50% of gross revenue * 3 manager = salary of secretary + general expense for 3 managers

50% of gross revenue * 3 = $45,000 + $30,000

50% of gross revenue * 3 = $75,000

50% of gross revenue = $75,000 / 3 = $25,000

0.5 * gross revenue = $25,000

gross revenue = $25,000 / 0.5

gross revenue = $50,000

so the gross revenue generated per manager is $50,000.