Question

If ERS had an incremental increase in revenue of $100,000, based on the net profit margin computed, what is the additional potential profit

Answer 1

Answer:

The first part of the question was missing, so I looked for it:

total revenue = $934,500

net income = $62,260

net profit margin = (net income / total revenue) x 100 = ($62,260 / $934,500) x 100 = 6.662%

if revenue increases by $100,000, then net income should increase by:

$100,000 x 6.662% = $6,662