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Alja [10]
3 years ago
6

Calgary Doughnuts had sales of $100 million in 2007. Its cost of sales were $70 million. If sales are expected to grow at 20% in

2008, compute the forecasted costs using the percent of sales method
Business
1 answer:
arlik [135]3 years ago
8 0

Answer:

$84 million

Explanation:

<u>For the year 2007</u>

Sales= 100 million

Cost of sales = 70 million

Percent of sales = Cost of sales / Sales * 100

P.S.=70/100 * 100 = 70%

<u>For the year 2008</u>

Sales= 120 million

Sales= Sales in 2007 * (1+20%)

Sales= 100 million* (1+0-20)

Sales=100 million *1.20

Sales=120 million

Therefore; Cost of Sales / Sales = 70%

Cost of Sales = 70% * Sales

COS= 70% * 120 Million

COS= 0.70 * 120 million

COS= 84 million

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