An Increase in Operating Expenses Would Have Which of the Following

question 56

Multiple Choice

An increase in operating expenses would have which of the following effects on a company's profit margin?

• A) Net profit margin would increase.
• B) Net profit margin would decrease.
• C) Net profit margin would remain unchanged.
• D) There is not enough information given to determine the effect.

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Definitions:

Inventory Controls

Systems and procedures used to manage and regulate the quantity, quality, and cost of inventory.

Merchandise

Goods or products that are bought and sold in any business activity.

LIFO

Last In, First Out, an inventory valuation method where the last items added to inventory are assumed to be the first sold.

Inventory Costing Methods

Techniques used to calculate the cost of inventory, including First-In, First-Out (FIFO), Last-In, First-Out (LIFO), and Average Cost methods.