The Adequacy of the Gross Profit Margin Depends On

question 23

Multiple Choice

The adequacy of the gross profit margin depends on:

• A) selling price.
• B) buying price.
• C) total expenses.
• D) both A and B

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Definitions:

Factory Overhead Cost

All of the costs of producing a product except for direct materials and direct labor.

Normal Capacity

The average level of operational output or activity that a company can sustain over a long period, considering fluctuations in demand and maintenance schedules.

Cost Variance

The difference between the actual cost and the standard or planned cost in a budget.

Standard Cost

A predetermined cost of manufacturing, selling, or any other business activity, used for budgeting and performance evaluation.