Calculate the percent change in overhead from Quarter 1 to Quarter 2 from the following income statement information:
\begin{tabular}{lcc}
& Q1 (x1000) & Q2 (x1000) \\
Net Sales & 115 & 125 \\
COGS & 30 & 31 \\
Gross Profit & 85 & 94 \\
Overhead & 32 & 41 \\
Net Income & 53 & 53
\end{tabular}
Percent Change = [?] %
Enter your answer as a percent rounded to the nearest tenth.
Answer (2)
Define the percent change formula: Percent Change = Old Value New Value − Old Value × 100 .
Substitute the overhead values for Q1 and Q2 into the formula: Percent Change = 32 41 − 32 × 100 .
Calculate the percent change: Percent Change = 32 9 × 100 = 28.125 .
Round the result to the nearest tenth: 28.1% .
Explanation
Understanding the Problem We are given the overhead costs for Quarter 1 (Q1) and Quarter 2 (Q2) and asked to calculate the percent change in overhead from Q1 to Q2. The overhead in Q1 is 32 (x1000) and the overhead in Q2 is 41 (x1000).
Defining Percent Change The formula for percent change is: Percent Change = Old Value New Value − Old Value × 100 In this case, the "New Value" is the overhead in Q2, and the "Old Value" is the overhead in Q1.
Applying the Formula Substituting the given values into the formula, we get: Percent Change = 32 41 − 32 × 100
Calculating the Change Now, we calculate the percent change: Percent Change = 32 9 × 100 = 0.28125 × 100 = 28.125
Rounding the Result We are asked to round the result to the nearest tenth. Therefore, Percent Change ≈ 28.1
Final Answer The percent change in overhead from Quarter 1 to Quarter 2 is approximately 28.1%.
Examples
Understanding percentage change is crucial in business for tracking growth, decline, or stability. For example, if a company's marketing expenses increase from $50,000 to $60,000, the percentage change helps determine the effectiveness of the marketing campaign. In personal finance, calculating the percentage change in investment values or expenses aids in budgeting and financial planning. This concept provides a standardized way to compare changes over time, enabling informed decision-making in various financial contexts.
The percent change in overhead from Q1 to Q2 is calculated using the formula Percent Change = Old Value New Value − Old Value × 100 . Substituting the overhead values yields a percent change of approximately 28.1%. Therefore, the overhead increased by 28.1% from Q1 to Q2.
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