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 manufact

The improvement in profit would be 100%.

Explanation:

Note: This question is not complete. The complete question is therefore provided before answering the question as follows:

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.

The explanation of the answer is now given as follows:

Given:

Previous cost of manufacturing = 60% of sales

Previous profit = 10% of sales

Current cost of manufacturing = 50% of sales

Therefore, we have:

Previous revenue = Previous cost of manufacturing + Previous profit = 60% + 10% = 70%

Current profit = Previous revenue - Current cost of manufacturing = 70% - 50% = 20%

Improvement in profit = ((Current profit - Previous profit) / Previous profit) * 100 = ((20% - 10%) / 10%) * 100 = (10% / 10%) * 100 = 1 * 100 = 100%

Therefore, the improvement in profit would be 100%.

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