When Will Volume Changes Cause Volatility in the Gross Profit

question 28

Multiple Choice

When will volume changes cause volatility in the gross profit margin?

• A) If cost of goods sold includes fixed costs which do not vary proportionately with volume changes.
• B) In industries with little capital.
• C) In industries having no fixed costs.
• D) If cost of goods sold includes costs that vary proportionately with volume changes.

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Definitions:

Dry Mouth

Dry mouth, or xerostomia, refers to a condition characterized by a decrease in saliva production, leading to a feeling of dryness in the mouth.

Causes

Causes are factors or conditions that directly bring about an effect, contributing to the occurrence of an event or the existence of a state.

Consequences

The outcomes or effects that follow from a specific action or condition.

Stress

A psychological or emotional strain resulting from demanding circumstances, challenges, or pressures.