Assume that procter and gamble had a 10 increase in sales, Ask an Expert

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Procter and gamble company is a Cincinnati-based company that produces household products under Brands names as Gillette, Bounty, Crest, Folgers. The company´s 2006 income statement showed the following

Net Sales 68,222

Costs of products sold 33,125

Selling, general and adm expenses 21,848

Operating income $13,249

Suppose that the cost of products sold is the only variable cost, selling, general and administrative expenses are fixed with respect to sales

Assume that Procter and Gamble had a 10% increase in sales in 2007 and that there was no change in costs except for increases associated with the higher volume of sales, compute the predicted 2007 oparating income for procter and gamble its percentage increase. Explain why the percentage increase in income differs from the percentage increase in sales

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