What Is the New Profit Margin with a 10-Percent Reduction

question 67

Multiple Choice

What is the new profit margin with a 10-percent reduction in the cost of materials,assuming sales remain the same?

• A)10%
• B)13.5%
• C)15.6%
• D)20%

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Definitions:

GAAP

Generally Accepted Accounting Principles, a set of rules and standards for financial reporting widely accepted in the accounting profession.

IFRS

Global accounting standards known as International Financial Reporting Standards, designed for the preparation of financial statements.

Other Comprehensive Income

Earnings that are not part of net income, including items that have not been realized or were not part of regular operations, such as foreign currency translation gains or losses.

Net Income

The total profit of a company after all expenses and taxes have been deducted from revenues, indicating the company's actual profit.