Start learning 50% faster. Sign in now
A 5% decrease in production cost will increase gross profit by lowering the cost of goods sold. Assuming no fixed costs, the gross profit margin will remain the same if the number of quantities sold increases. Administrative expenses are not deducted while calculating gross profit so this statement is irrelevant. For example: If A Ltd has sold 200 units @ 5 each and the cost of production is @ 3/ unit. As no fixed costs are involved, gross profit will be (200*5 – 200*3) = 400 Gross profit margin = Gross profit/sales = 400/1000 = 40% If the number of units sold increase to 250, keeping everything else constant New gross profit becomes = (250*5 – 250*3) = 500 New gross profit margin = 500/1250 = 40% So, with the increase in the number of units sold, the gross profit margin remains the same. But if the cost of production decreases to 2/unit Then, new gross profit = (200*5 – 200*2) = 600 New gross profit margin = 600/1000 = 60% Therefore, with the decrease in production cost per unit, the numerator increases but the denominator remains the same, therefore the overall gross profit margin increases.
Which one of the following measures is not likely to aid in improving India’s Balance of Payment position?
Increase in absolute and per capita real GNP do not connote a higher level of economic development, if?
What is the purpose of creating a centralized database of unorganized workers in e-Shram portal?
What is the purpose of setting up of Small Finance Banks (SFBs) in India?
1. To supply credit to small business units
2. To supply credit ...
Consider the following statements with respect to the International Labour Organisation-
I.It is the only tripartite United Nation (UN) agency. I...
Which of the following statements is/are not correct with respect to the Electoral Bonds Scheme ?
I.The government introduced the Electoral Bon...
Stand Up India Scheme provide financial aid for Working Capital needs through which organisation?
The government of India will be setting up an Indian Institute of Technology (IIT) for the first time abroad in ____________.
NITI Aayog has released the MPI India index in November, Who releases the MPI report at global level ?
What is the maximum annual deposit limit under Sukanya Samriddhi Yojna ?.