If a new purchasing agent is able to reduce the cost of materials by 10 percent,what would be the addition to the bottom line?
A)$5 million
B)$2.8 million
C)$10 million
D)$15 million

Question

Quizplus · Accepted Answer

The addition to the bottom line would be $2.8 million, assuming the cost savings directly translate to profit without specifying the initial cost of materials or the total revenue. A 10 percent reduction in costs leading to a $2.8 million increase suggests that the initial cost of materials was $28 million ($2.8 million is 10% of $28 million).

If a New Purchasing Agent Is Able to Reduce the Cost