Refer to the data in Exercise 4-16. (Round all decimal answers to four places and all dollar answers to the nearest dollar.)
Exercise 4-16

Required
a. Calculate profit as a percent of sales in the prior year.
b. Suppose sales in the current year increase by 15 percent. Calculate profit as a percent of sales for the new level of sales and explain why the percent is greater than the one calculated in part a.

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Dept. C Total Dept. A Dept. B $1,800,000 1,170,000 630,000 260,000 Sales Less variable costs $450,000 $750,000 $600,000 270,000 180,000 Contribution margin Less fixed costs 300,000 150,000 70,000 90,000 100,000 Profit $ 60,000 $110,000 $200,000 $ 370,000