If a Company Has Net Sales of $500,000 and Cost

question 75

Multiple Choice

If a company has net sales of $500,000 and cost of goods sold of $350,000, the gross profit margin is

• A)15%.
• B)30%.
• C)70%.
• D)100%.

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Definitions:

Job-Order Costing System

A costing method used to calculate the costs associated with individual jobs or orders, tracking direct labor, direct materials, and manufacturing overhead per job.

Predetermined Overhead Rate

It is a rate used to allocate estimated overhead costs to cost objects based on a chosen activity base, calculated before the period begins.

Machine-Hours

A measure of the amount of time a machine is used during the production process.

Variable Manufacturing Overhead

Costs that vary directly with the level of production output and are a part of the total manufacturing overhead.