Maxim Computer has a 10 percent of a $250 billion market.Maxim is the low-cost leader and realizes a 20% margin on sales,and marketing,sales,and administrative expenses equal 10% of sales.What are Maxim's sales revenues?

Question

Quizplus · Accepted Answer

Maxim's market share is 10% of $250 billion = $25 billion. 
They realize a 20% margin on sales, which means their total costs are 80% of sales. 
So their costs are 80% x $25 billion = $20 billion. 
Therefore, their sales revenues are $25 billion - $20 billion = $5 billion. 
Therefore, the best choice is B, $5 billion.

Maxim Computer Has a 10 Percent of a $250 Billion