A Firm Has Sales of $1,090,000 and Cost of Goods

question 35

Multiple Choice

A firm has sales of $1,090,000 and cost of goods sold of $739,000. The firm expects sales to increase by 5% next year. What is the gross profit amount expected to be next year if the firm uses the percentage of sales approach when compiling pro forma statements?

• A)$235,100
• B)$265,000
• C)$333,450
• D)$362,500
• E)$368,550

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Definitions:

Factor Portfolio

A portfolio constructed to have a high sensitivity to certain risk factors, aiming to achieve specific investment outcomes related to those factors.

Well-diversified Portfolio

An investment portfolio spread across different assets to reduce exposure to risk associated with any single investment.

Standard Deviation

A measure of the amount of variation or dispersion of a set of values, commonly used in finance to assess the volatility of an investment.