. Advertisement .
..3..
. Advertisement .
..4..
......... ADVERTISEMENT ......... ..8..
Question 7 Based on the industry-low, industry-average, and industry-high values on p. 7 of the latest issue of the FIR, which one of the following would correctly indicate that one or more elements of your company’s costs are too high compared to those of rival companies?
A. Your company’s distribution and warehouse costs per pair sold are less than 20% below the industry average in the Asia-Pacific region.
B. Your company’s operating profit margin in the wholesale segment of the North America region is only 5% above the industry low.
C. Your company’s marketing expenses per pair sold in both the Internet and Wholesale branded footwear segments in the Europe-Africa region are about 10% above the industry average.
D. Your company’s operating profit per pair sold in the Wholesale segment of the Asia-Pacific region is below the operating profit margin in the Internet segment of the Asia-Pacific region.
E. Your company’s operating profit per branded pair sold in the Wholesale segment in the North America region is only 10% above the industry average.
♦ Relevant knowledge
In a commercial setting it is the practice of comparing a company or a part of a business to a set standard in order to determine and evaluate the performance of the firm. The benchmarking standard is usually constructed by focusing on an entire industry or on a few competitors that represent the competitiveness of the market.
The correct answer is D. Your company’s operating profit per pair sold in the Wholesale segment of the Asia-Pacific region is below the operating profit margin in the Internet segment of the Asia-Pacific region.
Because operating profit (Gross Profit – Operating expense), is lower, it means that one or more cost elements have a higher value.