Homework Answers
Gross profit rate = Gross profit / Sales * 100
2016 ........ 25.30 / 150.30 * 100 = 16.83
2017 ......... 28.30 / 151.30 * 100 = 18.70
Thus we see that both total revenue and gross profit rate increased during the year 2017. This had resulted in increase of Operating income for 2017
Again there is decrease in operating expenses. A decrease in expenses will lead to increase in operating income.
Thus we can conclude that, Increase in sale revenue along with increase in gross margin rate and decrease in operating expenses all had cumulative impact in increasing the operating income for year 2017.
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