Consider the Following Income Statement Data for Barolo Inc -Based on Common-Size Analysis,which of the Following Statements Is Correct

question 45

Multiple Choice

Consider the following income statement data for Barolo Inc.:
$$\begin{array}{l}\begin{array} { l l r } &2020&2019\\\text {Sales revenue }&\$ 97,300&\$86,200\\\text {Less: Cost of goods sold }&45,600&53,400\\\text {Gross profit }&51,700&32,800\\\text {Less: Selling and administration costs }&22,500&18,300\\\text {Net Income }&\$29,200&\$14,500\\\end{array}\end{array}$$
-Based on common-size analysis,which of the following statements is correct?

• A)The increase in sales revenue in 2020 was caused by higher selling and administrative expenses.
• B)The company's cost to sales ratio improved in 2020.
• C)The increase in gross profit in 2020 was due to increased sales.
• D)Net income as a percent of sales declined in 2020.

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Definitions:

Cost of Goods Sold

The direct costs attributable to the production of the goods sold by a company, including materials, labor, and overhead expenses.

Finished Goods Inventory

Inventory that includes items that have been manufactured and are ready for sale but have not yet been sold.

Unadjusted Cost of Goods Sold

The initial calculation of all costs directly associated with the production of goods sold by a company, not including any adjustments for inventory methods or valuation changes.

Operations

The day-to-day activities involved in running a business that are necessary for producing goods and services and generating revenue.