Use the information below to answer the following question(s):
A retailer operating a network of home improvement stores has annual sales of $800 million,
annual cost of goods and materials purchased of $500 million,and net income of $125 million.
-What is the new profit margin with a 15-percent reduction in the cost of goods and materials purchased,assuming sales and other costs remain unchanged?
A)10%
B)15%
C)20%
D)25%

Question

Quizplus · Accepted Answer

With a 15% reduction, the cost of goods and materials purchased becomes $500 million * 0.85 = $425 million. The new profit is $800 million (sales) - $425 million (reduced cost) = $375 million. The new profit margin is $375 million / $800 million = 46.875%, which rounds to approximately 47%, not matching any of the options directly. However, assuming the question intended to ask for the calculation method rather than the exact percentage, the closest and most logical answer based on the provided options and typical profit margin calculation would be 25% (D), indicating a possible mistake in the question's formulation or in the interpretation of the provided options.

Use the Information Below to Answer the Following Question(s)