Question

The business manager is asked to calculate the projected profit for the upcoming year is the current year's sales stay the same and costs increase by 5%, which formula would the business manager use to calculate the projected profit?

Answer 1

To calculate the projected profit if sales remain constant and costs increase by 5%, the formula is Projected Profit = Current Year's Sales - (Current Year's Costs + 5% of Current Year's Costs). By applying current year figures to this formula, a business manager can estimate the upcoming year's profit.

Step-by-step explanation:

The business manager would use a formula that takes into account the current year's sales, the costs for the current year, and the projected increase in costs. To calculate the projected profit for the upcoming year, one can use the formula:

Projected Profit = (Current Year's Sales) - (Current Year's Costs + 5% of Current Year's Costs)

This formula assumes that the sales remain constant while the costs increase by 5%, affecting the overall profit margin. The business manager would need to input the actual figures for the current year's sales and costs to get the estimated profit for the upcoming year based on the given conditions.

If the current year's sales are $1 million and the total costs are $800,000, the projected costs after a 5% increase would be $840,000 ($800,000 + 0.05 x $800,000). The projected profit would therefore be $160,000 ($1 million - $840,000).