An entrepreneur lowers the product price and sales increase but total profit does not rise. Which additional data would be most useful?

Correct answer: Cost per unit and profit per unit

Higher sales volume alone does not guarantee higher total profit. After a price reduction, profit per unit may fall, or the cost per unit may be too high. Cost per unit and profit per unit therefore directly show why increased sales are not producing more profit. Competitors’ packaging may be useful market information, but it does not directly explain the unchanged profit. Exam tip: When analysing profit, check unit cost and margin along with sales volume.