In 2009,an agricultural company introduced a new cropping process which reduced the cost of growing some of its crops.If sales in 2008 and 2009 were steady at $25 million,but the gross margin increased from 2.3% to 3.4% between those years,by what amount was the cost of sales reduced?
A)$275,000
B)$325,000
C)$425,000
D)$575,000

Question

Quizplus · Accepted Answer

Explanation:Gross margin = (Sales - Cost of sales) / Sales2.3% = (25,000,000 - Cost of sales) / 25,000,000Cost of sales = 25,000,000 - 0.023 * 25,000,000 = 24,275,0003.4% = (25,000,000 - Cost of sales) / 25,000,000Cost of sales = 25,000,000 - 0.034 * 25,000,000 = 23,875,000Cost of sales reduced by 24,275,000 - 23,875,000 = $400,000

In 2009,an Agricultural Company Introduced a New Cropping Process Which