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 Question from Muriel: If a firm has a net profit of 4% on a sales volume of $100 million and the company has instituted logistics programs that result in cost savings of$1 million, what equivalent sales increase would be required to equal such a cost savings? What I do know is that the net profit % has increased from 4% to 5% and the profit has gone from $4,000,000 to$5,000,000 but I have no idea what the formula is to figure out how much sales would have to increase to result in that same profit.

Hi Muriel,

I assume what you saying is: "At 4% net profit, how many sales would be required for $5,000,000 of profit?" The formula would be: 0.04 x sales=5000000 which results in$125000000 in sales.

Hope this helps,
Janice

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