Gross Profit Calculation for the next year

Question

For the Calculation of Gross Profits for the next year, should we not adjust the 15% contribution from the <€5 products to the others. For now the calculations end up with 85% of Revenues and not 100%.

Answer 1

Hi Prakash,

No we cannot do that. Remember, we're actually completely getting rid of the <5 Euro products. If we stop selling that product, it's not like people will end up buying other products from us. The product they want is no longer there!

So, yes, at the end of this case, you do end up with fewer revenues. However, remember that the objective is to improve margins. That's why being very clear on the objective of a case is critical :)

Answer 2

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Answer 3

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