- This topic has 5 replies, 2 voices, and was last updated 10 years ago by
.
- Posts
Hello Mr John,
Can you explain how they got the gross profit margin in Q 1 part b of Dec 2008 exam,
specifically how the logic works,Thanks
Are you sure that you are asking about part (b) of question 1 from December 2008?
The gross profit margin in not required. Part (b) simply asks how the manager might manipulate results to obtain bonuses more frequently, and the bonus is based on the ROI (not on gross profit margin).
I am not sure which bit of it is causing you the problem.
The gross profit is profit (sales minus costs) as a percent of the sales.
The examiner has shown the working for the sales revenue each year (the volume increasing at 10% each year for two of the year, and the selling price per unit falling by 5% per year in the last two years).
The purchase price remains constant (per unit) and so having calculated the price in the first year the total is only affected by the volume increases.
Once you have the revenue and the costs, then the profit (and therefore profit margin) should not be a problem.
Thanks Mr John,
I got what you mean I should work the gross profit through sales -vc ,also the model answer indicated another way which is 40%-5% that what I want it to be clarified
but As you said I can do it the other way.
- You must be logged in to reply to this topic.