Computing gross profit of the project

Reference no: EM1310200

Q1) Assume you are analyzing the firm which is successfully executing strategy which distinguishes its products from those of its competitors. As of this strategy you project that next year firms will make 6.0% revenue growth from price increase and 3.0% revenue growth from sales volume increases. Suppose that firm production cost structure involves strictly variable cost. (That is cost to create each unit of product remains same.) Must you project that firm gross profit will rise next year? If you project that gross profit will rise is the increase a result of volume growth price growth or both? Should you project that firm%u2019s gross profit margin (gross profit divided by sales) will rise next years? If you project that the gross profit margin will increase is the increase a result of volume growth price growth or both?

Reference no: EM1310200

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