***Finance Question ** Cross-Section Analysis?

Question

What is the difference between trend or time-series analysis and cross-section analysis?

ONE MORE QUESTION***

Assume a firm is developing, manufacturing, and selling a basic software package at $500 per copy. Raw materials and direct labor total $200 per copy. Fixed costs are $250,000. If the firm sells 5,000 units per year, what will be the operating profit margin?

Answer 1

5000 times (500-200) equals 1,500,000

1.5 million minus 250,000 equals 1,250,000

Answer 2

I'm answering your 2nd question only:

Total Sales               $2.5 M ($500 x 5000 units)

Variable Costs           1.0 M ($200 x 5000 units)

Contribution Margin  $1.5 M

Fixed Costs                   .25

Gross Profit                $1.25M

Since you are asking for the margin its (1.25 / 2.5) = 50%

Answer 3

I'll make it a litlle more detailed for you.

Sales =                   $ 2,500,000       ($500 X 5000 units)

Variable Costs =     -1,000,000       ($200 X 5000 units)

                                       ----------------

Gross Profit =           1,500,000

Fixed Costs =            - 250,000

                                      ----------------

Operating Profit =   $1,250,000