Gross Margin Is Defined as Gross Profit

question 18

Multiple Choice

Gross margin is defined as gross profit:

• A) minus total operating expenses.
• B) divided by net sales revenues.
• C) divided by cost of sales.
• D) minus net income.

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Definitions:

Variable Costing Income Statement

A financial statement that includes only variable production costs (direct materials, direct labor, and variable manufacturing overhead) in the cost of goods sold and separates fixed overhead costs as period costs.

Electricity

The cost associated with the consumption of electrical power used in business operations or manufacturing processes.

Absorption Costing

An accounting method where all manufacturing costs, both fixed and variable, are allocated to produced units, making it different from variable or direct costing methods.

Factory Machinery

The collective term for the mechanical, electrical, and computer-based equipment used in a manufacturing or production facility to create products.