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What explains the relationship between the percentage change in sales and the percentage change in pre-tax profit for Bethlehem? Answer: Currently, pretax profit = $2.5B ─ 2B ─ 0.4B = $0.1B. We assume that variable costs are proportional to sales. Sales in the new year are 2.5(1.15) = $2.875B. Costs are 2.0(1.15) = $2.3B. ................
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