bna The Spencer Corporation is analyzing its annual sales revenue, costs, and pr
ID: 2772883 • Letter: B
Question
bna The Spencer Corporation is analyzing its annual sales revenue, costs, and profits for a specific product line. The figures indicate that a lot of money Is being spent on costs and the profits are lower than desired. The CEO wants to evaluate two strategies for increasing profits: a supply chain strategy of reducing material costs or a sales strategy of increasing sales. Examine the data below and answer the following question. The company would like to increase the profit for this product line by $5,000 per year. By what percentage would the company have to Increase its Sales in order to achieve the desired profit if the various costs remain the same? Your answer should be in the format of a percentag^with three decimal places. Do not insert the percent symbol or any text into the response box below. Answer:Explanation / Answer
Profit as a percentage of revenue = ( sales revenue - material cost - production cost)/ sales revenue
therefore P% = (111795 - 55527 - 29450)/111795 = 23.99%
Inorder to have a profit of 5000 ,sales should be 5000/P% = 5000/.2399 = 20843.27
%age increase in sales = (20843.27/111795 )*100 = 18.644%
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