FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Question
1.1 If the cost of manufacturing (direct material and direct labor) is 60% of sales and profit is 10% of sales, what would be the improvement in profit if, through better planning and control, the cost of manufacturing was reduced from 60% of sales to 55% of sales? 1.2 In problem 1.1, how much would sales have to increase to provide the same increase in profits (keeping the manufacturing cost the same at 60%)?
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Transcribed Image Text:1.1 If the cost of manufacturing (direct material and direct labor) is 60% of sales and profit is 10% of sales, what would be the improvement in profit if, through better planning and control, the cost of manufacturing was reduced from 60% of sales to 55% of sales? 1.2 In problem 1.1, how much would sales have to increase to provide the same increase in profits (keeping the manufacturing cost the same at 60%)?
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