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An owner had a profit margin of $50,000 last year. She expects to receive $1,168,000 from sponsorships this year with no additional expenses. What is the estimated profit margin for the upcoming year? a) $50,000 b) $258,000 c) $910,000 d) $1,218,000

Answer :

Nonicorp1

Answer:

The answer is option (d)

Estimated profit margin for the upcoming year=$1,218,000

Explanation:

Profit margin can be expressed as the ration of total net income to the net sales.

From the given information;

Last years profit margin carried forward to this year=$50,000

Sponsorship this year=$1,168,000 without any additional expenses,meaning the profit margin=$1,168,000

The sponsorship=profit margin since the whole proportion of the sponsorship income is the profit

Estimated profit margin for the upcoming year=Last years profit margin+profit margin due to sponsorship

where;

Last years profit margin=$50,000

Profit margin due to sponsorship=$1,168,000

replacing;

Estimated profit margin for the upcoming year=($1,168,000+$50,000)

Estimated profit margin for the upcoming year=$1,218,000

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