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nasty-shy [4]
3 years ago
13

Low Carb Diet Supplement Inc. has two divisions. Division A has a profit of $134,000 on sales of $2,310,000. Division B is able

to make only $33,400 on sales of $373,000. a. Compute the profit margins (return on sales) for each division. (Input your answers as a percent rounded to 2 decimal places.) b. Based on the profit margins (returns on sales), which division is superior? Division A Division B
Business
1 answer:
Genrish500 [490]3 years ago
8 0

Answer:

a. Division A = 5.80 %, Division B = 8.95 %

b. Division B is superior. Because, it generates a greater profit margin per each sale made.

Explanation:

<u> a. Compute the profit margins</u>

Profit margin = Profit / Sales × 100

Division A = $134,000 / $2,310,000 × 100

                 = 5.80 % (2 decimal places.)

Division B = $33,400 / $373,000 × 100

                 = 8.95 % (2 decimal places.)

<u> b. Based on the profit margins</u>

Division B is superior as it generates a greater profit margin per each sale made.

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