Key Concept: Comparative Statement of Profit and Loss, Multi-Period Analysis
c) \$2,70,000
[Solution Description]
Step 1: Calculate Year 2 Revenue from Operations.
- $Year 2 Revenue = 12,00,000 \times 1.25 = \$15,00,000$
Step 2: Compute Cost of Revenue from Operations.
- Year 1: $Cost = 0.60 \times 12,00,000 = \$7,20,000$
- Year 2: $Cost = 0.50 \times 15,00,000 = \$7,50,000$
Step 3: Find Total Revenue for both years.
- Year 1: $Total Revenue = 12,00,000 + 1,00,000 = \$13,00,000$
- Year 2: $Total Revenue = 15,00,000 + 1,00,000 = \$16,00,000$
Step 4: Compute Total Expenses (Cost + Other Expenses).
- Year 1: $Total Expenses = 7,20,000 + 2,00,000 = \$9,20,000$
- Year 2: $Total Expenses = 7,50,000 + 2,00,000 = \$9,50,000$
Step 5: Calculate PBT for both years.
- Year 1: $PBT = 13,00,000 - 9,20,000 = \$3,80,000$
- Year 2: $PBT = 16,00,000 - 9,50,000 = \$6,50,000$
Step 6: Determine Absolute Change in PBT.
- $Absolute Change = 6,50,000 - 3,80,000 = \$2,70,000$
Your Answer is correct.
c) \$2,70,000
[Solution Description]
Step 1: Calculate Year 2 Revenue from Operations.
- $Year 2 Revenue = 12,00,000 \times 1.25 = \$15,00,000$
Step 2: Compute Cost of Revenue from Operations.
- Year 1: $Cost = 0.60 \times 12,00,000 = \$7,20,000$
- Year 2: $Cost = 0.50 \times 15,00,000 = \$7,50,000$
Step 3: Find Total Revenue for both years.
- Year 1: $Total Revenue = 12,00,000 + 1,00,000 = \$13,00,000$
- Year 2: $Total Revenue = 15,00,000 + 1,00,000 = \$16,00,000$
Step 4: Compute Total Expenses (Cost + Other Expenses).
- Year 1: $Total Expenses = 7,20,000 + 2,00,000 = \$9,20,000$
- Year 2: $Total Expenses = 7,50,000 + 2,00,000 = \$9,50,000$
Step 5: Calculate PBT for both years.
- Year 1: $PBT = 13,00,000 - 9,20,000 = \$3,80,000$
- Year 2: $PBT = 16,00,000 - 9,50,000 = \$6,50,000$
Step 6: Determine Absolute Change in PBT.
- $Absolute Change = 6,50,000 - 3,80,000 = \$2,70,000$