Your Firm's Sales Are Estimated to Increase by 10% in the Next

question 69

Multiple Choice

Your firm's sales are estimated to increase by 10% in the next year.However,soon after the beginning of the year it becomes apparent that the growth in sales is more likely to be 20%.If your cost of good sold consists of only variable expenses,and the relationship between revenues and costs remain the same,which of the following situations would you expect to be true?

• A)The percentage change in gross profit should be greater than the percentage change in sales.
• B)The percentage change in gross profit should be less than the percentage change in sales.
• C)The percentage change in gross profit should be zero because gross profit is not a function of sales if all CGS are variable.
• D)The percentage change in gross profit should be the same as the percentage change in sales.

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Definitions:

Coding Scheme

A systematic way of classifying or categorizing units of analysis.

Classification System

A system for organizing data or items into categories based on predefined criteria to facilitate understanding and analysis.

Sampled Unit

A specific element or set of elements selected from a larger population for the purpose of analysis or experimentation.

Content Analysis

A research method for studying documents and communication artifacts, which involves coding and analyzing texts or images.