CoastCup sells reusable drinks bottles. Sales revenue is £900,000, gross profit margin is 48% and net profit margin is 7%. Customer research shows strong satisfaction with quality but concern about price.
Option 1: Use a cheaper material expected to raise gross profit margin to 54%, although 32% of surveyed customers say it feels less durable
Option 2: Keep the current material and raise the selling price by 6%
Justify which one of these two options CoastCup should choose.
37 exam-style questions on Edexcel GCSE Business 2.4 Making financial decisions, covering 2.4.1a Gross and net profit, 2.4.1b Margins and average rate of return, 2.4.2a Using quantitative business data, 2.4.2b Financial information: understanding performance, and 2.4.2c Financial information: making business decisions. Each one has a worked solution and a mark scheme showing where the marks go.