Charnge in Sales Ratio

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Last year, Company X spent $3 million to manufacture consumer goods that obtained $50 million in sales revenue. This year, Company X spent $5 million to manufacture goods that obtained $98 in sales revenue. By approximately what percent did the ratio of manufacturing costs to sales revenue decrease from last year to this year?

Review: Charnge in Sales Ratio


Explanation

Let's write the ratio as a fraction with units. We want to know the percent decrease of this thing:



Last year, it was . This year, it was . Since and , the ratio has decreased from 0.06 to about 0.05. The percent change is the difference over the original value, so it's approximately , or 17%. This is much closer to 15% than 25%.

The correct answer is (C).


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