Asked by Roberta Carubia on Jun 15, 2024
Verified
Which of the following statements is incorrect?
A) If selling and administrative expenses as a percentage of sales increases,then gross profit percentage will decrease.
B) If the cost of goods sold percentage decreases and other expenses do not change,then net profit margin will increase as a percentage of sales.
C) If sales dollars decrease,a company might still report a higher gross profit percentage if cost of goods sold decreases at a faster rate than the decrease in sales.
D) It is possible that when selling and administrative expense in dollars decrease,selling and administrative expenses as a percentage of sales will increase.
Gross Profit Percentage
A financial metric that shows the portion of sales revenue that exceeds the cost of goods sold (COGS), expressed as a percentage of total sales revenue.
Net Profit Margin
A profitability ratio that measures the percentage of net income generated from total revenue, indicating the efficiency of a company in managing its operations and expenses.
- Examine how operational strategies influence cost management and the creation of revenue.
Verified Answer
AP
Amanda PlevickJun 16, 2024
Final Answer :
A
Explanation :
Gross profit percentage is calculated based on sales and cost of goods sold, not on selling and administrative expenses. Therefore, changes in selling and administrative expenses as a percentage of sales do not directly affect the gross profit percentage.
Learning Objectives
- Examine how operational strategies influence cost management and the creation of revenue.
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