Ratio Analysis of Forecast and Projections_M3 Flashcards
1
Q
How to calculate the SP when GM is given in a Percent?
A
A target GM of 40% implies that the cost represents 60% of the SP per unit. $178 / 0.60 = $296.67.
- The gross margin is equal to (Sales – Costs) / Sales, so ($296.67 – $178.00) / $296.67 = 40%.
