Company A finds profit at $15,000 inadequate for expanding business. The bank is insisting on an improved profit picture prior to approval of a loan for some new equipment. Company A would like to improve the profit line to $25,000 to obtain the bank's loan approval.

1. What percentage improvement is needed in a supply chain strategy for profit to improve to $25,000? What is the cost of material with $25,000 profit?
2. What percentage improvement is needed in a sales strategy for profit to improve to $25,000? What must sales be for profit to improve to $25,000?
Sales = $250,000 (100% of sales); Cost of supply chain purchases = $175,000 (70% of sales); other production costs = $30,000 (12$ of sales); Fixed Costs = $30,000 (12% of sales); Profit = $15,000 (6% of sales)