A company is deciding where to assign its summer intern. The manager estimates that the intern can save the company $10,000 in supply chain costs
Given the table below, what increase in sales (revenue) by the intern is required to show an equal profit?
Supply Chain costs Variable Costs (materials) Profits
% of current sales (revenue) 35 25 40
Additional sales would increase costs by (.35+.25 ) × Sales. Profit would therefore be X - .6X = .4X, where X is the increase in sales (revenue). Solve for when .4X = 10,000 or X = $25,000 required in increased sales to account for the same profit level.
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