I’m confused by the answer in the text
I worked it out as:
Increase in COGS 105.38 x 0.04 x 0.20 = 0.84304 (which agrees to the solution)
Adding this figure to the original COGS figure of 105.38 gives 106.22304
New GP margin = (152.38-106.22304) / 152.38 = 30.29%
Change in GP margin = (30.29 / (47/152.38)) - 1 = -1.79%
In the text, to arrive at the change (stated to be a decrease in the question) in GP margin, they take the change in COGS and divide by sales to arrive at a figure of +0.55% - can someone explain this please?
I worked it out as:
Increase in COGS 105.38 x 0.04 x 0.20 = 0.84304 (which agrees to the solution)
Adding this figure to the original COGS figure of 105.38 gives 106.22304
New GP margin = (152.38-106.22304) / 152.38 = 30.29%
Change in GP margin = (30.29 / (47/152.38)) - 1 = -1.79%
In the text, to arrive at the change (stated to be a decrease in the question) in GP margin, they take the change in COGS and divide by sales to arrive at a figure of +0.55% - can someone explain this please?