Cost and Profit

Hi Amit,

UR probably clear that our aim is to calculate the percentage increase in the profit margin

For this we will first have to fine the value of Profit Margin(PM) for the month of January and Feb. We know the PM for the month of Jan but in order to calculate the PM for the month of Feb we will have to fine the SR of Feb and PC of Feb.

We can find the SR of Feb as the below
SR in Jan was 2,000,000
SR is Feb increased by 10% on that of Jan i.e. the increased amount (10/100)*2,000,000=200,000
So the total SR in Feb = SR in Jan + Incresed amount = 2,000,000 + 200,000 = 2,200,000

Profit Margin(PM) for Jan = Sales Revenur(SR) for Jan - Production Cost(PC) for Jan
i.e. 100,000 = 2,000,000 - PC
Therefore PC for Jan = 2,000,000 - 100,000 = 1,900,000

Now its given that PC rose by 5%.
Therfore PC for Feb = (5/100)*1,900,000 + 1,900,000 = 1965000

PM for Feb = SR for Feb - PC for Feb = 2,200,000 - 1965000 = 235000

% Change in PM = ((Difference in PM of 2 months)/PM of Jan)*100 = 135%

Can you pls confirm the Ans Amit