Question

company has reported gross margin in prior periods of 15.5%. 15.4%, 15.7% and 15.6% it recently launched a successful more profitable new products that is 20%of sales. what is the most likely gross margin for the coming quarter?

Answer 1

Answer:

16.33%

Explanation:

For the coming quarter the Gross margin is also likely to increase by 20% because Sales will actually increase by 20% based on the given data and also on the assumption that the new product will be equally profitable. In this way the Gross margin must increase by 20% as well. However the quarterly rise in Gross margin would be 5% (20% divided by 4).

 

Gross Margin 1 15.40%

Gross Margin 2 15.50%

Gross Margin 3 15.60%

Gross Margin 4 15.70%

Average Gross Margin 15.55%

20% increase in Gross Margin 18.66%

5% increase in Gross Margin 16.33%