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APICS Exam CPIM Topic 1 Question 95 Discussion

Actual exam question for APICS's CPIM exam
Question #: 95
Topic #: 1
[All CPIM Questions]

An income statement of a company is as follows:

Profit has been increased by 60% to get the in profit by 600,000 by increasing revenue; sales would have to increase to 1.2 million. What will happen with CGS?

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Suggested Answer: A

by Ellsworth at Aug 22, 2024, 08:48 AM

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Valene
2 months ago
Alright, time to put on my accountant hat. If revenue goes up by 1.2 million and profit goes up by 600,000, then CGS must have gone down. C all the way, baby!
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Janessa
10 days ago
I see your point, C does make sense in this scenario.
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Patti
11 days ago
Not necessarily, if the profit increased by 60% while revenue increased by 1.2 million, CGS must have decreased.
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Junita
12 days ago
But wouldn't an increase in revenue usually lead to an increase in CGS?
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Gracie
1 months ago
I think you're right, C seems like the correct answer.
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Jerilyn
2 months ago
Hmm, I'm sensing a trick question here. What if the company just decided to throw money at the problem and increase everything by 4%? Wouldn't that work too? Oh, the joys of corporate finance...
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Jamey
2 months ago
I'll go with C on this one. Decrease by 4%. Gotta love these cost-cutting exercises, am I right? Saves the company a bundle!
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Minna
1 months ago
I'm with you on this one, I also think it's A. Decrease by 3%. Cost-cutting exercises can definitely help boost profits.
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Lucy
1 months ago
I disagree, I believe the answer is A. Decrease by 3%. If profit increased by 60%, it would make sense for cost of goods sold to decrease.
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Deeann
1 months ago
I think the answer is B. Increase by 4%. It makes sense that if profit increased, cost of goods sold would also increase.
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Quentin
3 months ago
Wait, if revenue increases by 1.2 million and profit increases by 600,000, that means the cost of goods sold (CGS) must have decreased. Simple math, folks!
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Novella
1 months ago
C) Decrease by 4%
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Myong
1 months ago
Actually, the cost of goods sold would have decreased in this scenario, not remained the same.
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Markus
1 months ago
D) Will remain same
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Shelia
1 months ago
That's correct! When revenue increases and profit increases, it means the cost of goods sold must have decreased.
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Jenelle
2 months ago
A) Decrease by 3%
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Jackie
3 months ago
Okay, so we need to increase profit by 600,000 and revenue by 1.2 million. Seems like CGS needs to decrease to maintain the 60% profit increase. Looks like C is the correct answer.
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Van
2 months ago
User 2: Yeah, decreasing CGS makes sense to increase profit.
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Jordan
2 months ago
Yes, I think choosing option C to decrease CGS by 4% is the right decision.
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Salome
2 months ago
So, decreasing CGS by 4% makes sense to maintain the profit margin.
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Lorriane
2 months ago
User 1: I think you're right, C is the correct answer.
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Jeniffer
3 months ago
But we also need to consider the cost of goods sold, it might need to decrease to achieve the profit increase.
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Stephane
3 months ago
I agree, increasing revenue by 1.2 million seems like a good strategy.
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Kristel
3 months ago
But if profit increased by 60%, then CGS should decrease to maintain the same profit margin. So, I still think it's C)
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Alfreda
3 months ago
I disagree, I believe the answer is A) Decrease by 3%
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Kristel
4 months ago
I think the answer is C) Decrease by 4%
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