how to solve this
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 50%of sales?
A. 100%
B. 70%
C. 50%
D. 10%
Let SP = 100Total Cost =
Let SP = 100
Total Cost = 90
Mfg Cost = 60
Var Cost = 30
Now Mgf cost is changed to 50
So Total cost = 80
Profit = 20
i.e. Profit is increased by 100%