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    This Gross Profit Worksheet shows the effects of reducing cost verses increasing sales.  
    Current Sales Amount Enter Current Sales Amount IE 10,000.    
    Current Gross Profit % Enter Current GP Percentage IE 25%    
    Projected % Cost Reduction Enter Projected Cost Reduction IE 5%    
    Projected % Sales Increase Enter Projected Sales Increase IE 10%    
    		Calculations Original Reduce Cost Only Increase Sales Only Effect of Both
    Sales 100.00%
    C.G.S.
    G.P.  
        Change in Gross Profit $  
        New Gross Profit %  
        Increase in Gross Profit Dollars  
        New Projected Gross Profit $  
    This exercise is designed to demonstrate where management can get the best returns. Obviously it is best to expend time and effort where you will achieve the best return . This in no way means that efforts shouldn't be expended in both reducing costs and in increasing sales, it merely attempts to depict what the results could be with each method of effecting profits.  
        With a starting gross profit of 35% An increase in sales of 6.5 % is equivalent of a cost reduction of 10%. With a starting gross profit of 45% An increase in sales of 5.5 % is equivalent of a cost reduction of 10%. With a starting gross profit of505% An increase in sales of 5.0 % is equivalent of a cost reduction of 10%.