Easton Industries desires a return on sales of 20%. Their current sales revenue is $20,000,000 and their current return on sales is 15%. Assuming sales remain the same, to achieve their desired target profit, they must reduce their costs by

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To achieve a 20% return on sales on $20,000,000, Easton Industries needs a profit of $4,000,000 (20% of $20,000,000). Currently, with a 15% return on sales, their profit is $3,000,000 (15% of $20,000,000). To increase their profit from $3,000,000 to $4,000,000, they must reduce their costs by $1,000,000.

Easton Industries Desires a Return on Sales of 20