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8 February, 08:36

The salesforce sold $30M in additional products; purchasing negotiated $10M in material costs savings.

If operating profit is 12%, how did their impacts on operating profit compare?

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  1. 8 February, 08:56
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    The purchasing department increased operating profits by almost three times the amount that the additional sales generated.

    Explanation:

    The sale of $30 million in additional products generated $3.6 million in additional operating profits ( = $10 million x 12%).

    But the savings generated by the purchasing department increased operating profits by $10 million, which is almost three times the amount that the additional sales generated: $10 million vs. $3.6 million.
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