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Assume that the cost of the most efficient logistics system for a 97.8% service goal is $2.8 million higher than the existing system's cost. If for each dollar of additional sales, the company incurs 88 cents in out-of-pocket costs, what incremental sales volume, in dollars, will the company need to recover the increase in logistics costs? Your answer must be accurate to the nearest dollar.

Respuesta :

Answer:

incremental sales volume = $23333333.33

Explanation:

given data

efficient logistics system = 97.8%

service goal = $2.8 million

company incurs = 88 cents

to find out

what incremental sales volume

solution

we get here incremental sales volume that is express as

incremental sales volume = [tex]\frac{service\ goal}{1-company\ incurs}[/tex]   ..................1

put here value we get

incremental sales volume = [tex]\frac{2.8 million}{1-0.88}[/tex]

incremental sales volume = $23333333.33

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