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Dear Sir,
Another problem i am facing,i want you to explain it please..Suppose..
2007 2008
$ $
Sales: 700,000 1500,000
Gross Margin 20% 40%
Net Profit Margin 30% 20%Now my Question is,How can we figure out either this change in sales(1500-700=800$) occurred due to Change in margin%,price,or change in volume sold?
This example is supposed,apology if you find something at my fault.Please explain these as well..
Scenario 1 Scenario 2
2007 2008 2007 2008
Margin 30% 30% 40% 30%
Net Margin 20% 25% 20% 40%Please Explain what is Actually Happening in both Scenario,s in detail..
IN DEPTH Actually..I have no idea what you are asking (and it has nothing to do with calculus – calculus is not examinable in ACCA exams)
Dear Sir,
I am sorry that i couldn’t able to tell you my problem properly.I try again,,Sales of 2007=700,000 and of 2008 its 1500,000.Change in sales which is of 800,000$ in given period,I want to know the reason of this change.Either it changed due to change in % Margin,Price or Volume..???
Margins given below according to years..Gross and Net MARGIN of 2007=20% and 30%.
Gross and NET MARGIN of 2008=40% and 20%..
I hope this will help you about my question.I appreciate your time please let me know the REASON OF THAT CHANGE.The gross margin could be due to either a reduction in the cost of sales, or an increase in the selling price.
If it was just due to an increase in the selling price, then the sales would have increased by 40% to 700,000 + (40% x 700,000) = 980,000.
since it increased to 1,500,000, there must have been an increase in the sales volume.
The gross margin could be due to either a reduction in the cost of sales, or an increase in the selling price.
Sir please explain this line deeply,I want to get reasons.
What is there to explain deeply?? This is basic Paper F3.
The gross margin is the gross profit as a % of the sales.
Suppose the selling price is 100 and the cost of sales is 80. The profit is 20 and therefore the gross margin is 20%.
To increase it you either reduce the cost of sales, or you charge a higher selling price.
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