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hi i would like to know why wouldnt a change frm the amortisation of development cost being included in COS to being included in admin expense, explain a fall in a company’s operating profit margin?
Hi,
If it was previously in cost of sales then it will still have been part of the operating profit and therefore the operating profit margin. When it is in administrative expenses it will still be part of operating profit and operating profit margin.
There would be a difference in the gross profit margin, as the expense is no longer in gross margin having been moved to administrative expenses, but no difference in the operating profit margin.
Thanks
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