Lorin is right.
It depends on your interpretation. You could also have computed:
Increase in sales: \(10%\times 1.2\times 0.25\)
It depends on your interpretation. You could also have computed:
Increase in sales: \(10%\times 1.2\times 0.25\)
Increase in gross profits: \((0.4-0.25)\times 1.32\)
The sum must be the same as in the solutions. In both cases, we are computing the economic gain and not the level of gross profits.