Under the Gross Profit Method Each of the Following Items

question 69

Multiple Choice

Under the gross profit method each of the following items are estimated except for the

• A) cost of ending inventory.
• B) cost of goods sold.
• C) cost of goods purchased.
• D) gross profit.

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Definitions:

Fixed Costs

Costs that remain constant and do not change based on the volume of goods or services a business produces.

Required Sales

The amount of sales a company needs to achieve in order to cover its costs and reach a desired level of profit.

Net Income

The company's earnings following the deduction of all taxes, expenses, and costs from its total revenue.

Contribution Margin Ratio

A financial metric that measures the ability of a company to cover variable costs with its revenue.