The Gross Profit Percentage Is Calculated by Dividing Net Sales

question 40

True/False

The gross profit percentage is calculated by dividing net sales by gross profit.

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Definitions:

Residual Income

A measure of net income after accounting for the cost of capital.

Activity Base

A measure used for allocating fixed costs to products or services based on the amount of activity.

Service Departments

Units within an organization that provide support to the profit-making departments, rather than directly contributing to profits.

Profit Margin

represents the percentage of revenue that remains as profit after all operating expenses, taxes, and costs have been deducted from total sales.