Chelsea Lee runs the sales division for a local auto insurance firm. One of her key duties is to ensure the company has 10 percent market share by the end of the year. When evaluating the current sales numbers, she determines that her sales division has total sales of $3 million and the entire industry has total sales of $50 million. What additional sales must Chelsea Lee’s division meet to ensure they have 10 percent of the market by the end of the year?

Question

BlackTom AI · Accepted Answer

First, determine what 10 percent of the total market would be. The industry total sales are $50 million, so 10% of that is 0.10 × 50,000,000 = $5,000,000.
Next, compare this target to Chelsea Lee’s current division sales. The division has $3,000,000 in sales right now.
Now assess how much more is needed to reach the $5,000,000 target. Subtract the current sales from the target: $5,000,000 − $3,000,000 = $2,000,000.
Consider each option:
- Option "$2 million": This matches the calculated required increment to reach 10% of the market, given the target is $5 million and current is $3 million.
- Option "$10 million": This would imply a total division sales of $13 million, which is far above the necessary $5 million target and does not align with reaching exactly 10% of a $50 million market.
- Option "$5 million": This would bring total division sales to $8 million, which would be 16% of the market, exceeding the 10% goal.
- Option "$1 million": This would result in total division sales of $4 million, which is only 8% of the market, falling short of the 10% target.
In this scenario, the key idea is matching the target market share by ensuring the division’s sales reach $5 million in total, given the industry size is $50 million. The incremental amount required to accomplish that is the difference between $5,000,000 and $3,000,000, which equals $2,000,000.

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