QUESTION 3:

ABC company has 1,000 employees. The total annual base pay for all employees combined equals $8,500,000. Assume the company's profit to be $50 million.

Consider the following three formulas for determining the total profit-sharing pool:

1. First-Dollar of Profits: The company agrees to share three percent of all profits up to $25 million.

2. Graduated First-Dollar-of-Profits: The company agrees to share four percent of all profits up to $20 million, and six percent of all profits up to $45 million.

3. Profitability Threshold Formula: The company agrees to share five percent of all profits above $20 million up to $35 million.

Questions:

Part 1:

Calculate the total profit sharing pool for all three formulas noted below.

Total profits under the "First-Dollar of Profits" formula is : [A]

Total profits under the "Graduated First-Dollar-of-Profits" is : [B]

Total profits under the "Profitability Threshold Formula" is : [C]

Please answer A, B, and C. And please explain your steps clearly. Thank you!