If Net Sales Increases and Cost of Goods Sold Decreases

question 25

Multiple Choice

If net sales increases and cost of goods sold decreases, the gross profit ratio:

• A)remains the same.
• B)decreases.
• C)increases.
• D)cannot be determined from the information given.

---

Definitions:

Cost of Goods Sold

The overall expenses involved in creating or purchasing goods sold in a given timeframe, consisting of the cost of materials, workforce, and indirect costs.

Standard Cost

A set cost for producing either one unit or multiple units of a product within a defined timeframe, based on existing or expected operational circumstances.

Direct Materials

The raw materials that can be directly traced to the production of a specific product.

Direct Labor

The wages and other costs for labor that is directly involved in the production of goods or services.