Which of the Following Properly Explains Why Operating Expenses Percentage

question 5

Multiple Choice

Which of the following properly explains why operating expenses percentage in Costco (as a warehouse store) is lower than that of Macy's (as a department store) ?

• A)Costco has higher selling expenses than Macy's.
• B)Costco operates with a larger administrative staff than Macy's.
• C)Costco spends less on maintaining the ambiance of its stores than Macy's.
• D)Costco advertises less than Macy's.

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Definitions:

Lower of Cost or Market

A valuation rule that requires inventory to be recorded at the lower of the original cost or the current market value.

Periodic Inventory System

An inventory accounting system where the inventory count is physically conducted at specific periods, leading to adjustments in the accounts at each period end.

Inventory Cost

The total cost associated with acquiring, storing, and preparing goods for sale, including purchase price, storage, and handling costs.

Direct Method

A way of preparing the cash flow statement where actual cash flows from operating activities are listed directly.