Make the amounts more concrete by using an example. If last year, the company had revenues of $100, it spent $20 on employee compensation. This year revenues increased by 10%, to $110. Since employee compensation increased by 25%, it is now 25% of $110, or $27.50.

The question, then, is: $27.50 is what percent of $20?

(27.50 / 20) x 100%
= 27.50 x (100/20)
= 27.50 x 5 = 137.5, choice (D).