Brain Teasers & Mental Math
A company with a 30% gross margin cuts prices by 10%. How much must volume rise to keep gross profit dollars flat?
Model answer
+50%.
Per 100 of old price: cost = 70, unit margin = 30. New price = 90, cost still 70 → unit margin = 20. To keep total gross profit flat, volume must rise by 30/20 = 1.5× → +50%.
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