Determine the gross profit if cogs vary with sales


Question:

Consider the following condensed Income Statement:

2004

Sales $8,000,000

COGS 6,500,000

Gross Profit 1,500,000

Sales growth in 2005 is expected to be 15%

If COGS is assumed to vary directly with sales, then Gross Profit for 2005 will be:

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Finance Basics: Determine the gross profit if cogs vary with sales
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