The total sales of a company is $$1,000$K$.$ The company aims to increase its profit by $25\%.$ There are two ways to increase profit by $25\%,$ either by purchasing the raw materials at a lower price or by increasing the sales amount. Assume that the current purchase price of raw materials is $40\%$ of the total sales, labor cost is $25\%$ of the total sales, and fixed administrative cost is $250$K$.$ Calculate the percentage of sales increase to achieve a $25\%$ increase in the profit.

 

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Lets break down the problem step by step 1 Current Profit Total sales 1000K Profit Total sales Labor cost Raw materials cost Fixed administrative cost ... View the full answer