The profit margin (net income to sales ratio) at New Company is 20%. New Company gave a customer a discount of 10%. However, if the discount had only been 6% the

customer would still have made the same quantity of purchases. The effect of the unnecessary discount was to reduce New Company income by:

a. 4%

b. 6%

c. 20%.*

d. None of the above

Look for process work to understand why c. 20% is the correct answer.