Question

Calculate the cost advantage index if the percentage cost of goods sold by the business is 40% and the average percentage cost of goods sold by its top three competitors are 50%, 60%, and 70%, respectively.

Answer 1

Answer:

66.67

Explanation:

Given:

Percentage cost of goods sold = 40%

Cost of goods sold by 3 competitors =  50%, 60%, 70%

Cost advantage index = ?

Computation or average Cost of goods sold = (50% + 60% + 70%) / 3

= 60%

Cost advantage index = [Percentage cost of goods sold x 100] / Average Cost of goods sold

= (40% x 100) / 60%

= 66.67