Olivera Ltd Provides the Following Data for the Year 2016

question 85

Multiple Choice

Olivera Ltd provides the following data for the year 2016: $$\begin{array} { | l | l | } \hline \text { Sales revenue } & \$ 629,000 \\\hline \text { Sales returns and allowances } & 20,000 \\\hline \text { Sales discounts } & 6000 \\\hline \text { Net sales revenue } & \$ 603,000 \\\hline \text { Cost of sales } & \$ 390,000 \\\hline\end{array}$$ On a vertical analysis report,the gross profit as a percentage of net sales will be:

• A)35.32%
• B)33.86%
• C)36.32%
• D)64.68%

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Definitions:

Profit-maximizing Output

The maximum profit attainment point for a company occurs when the marginal cost matches the marginal revenue, indicating the optimum production level.

Purely Competitive Firm

A firm operating in a market where there are many sellers and buyers, the products are homogenous, and there are no barriers to entry or exit, leading to market prices being determined by supply and demand.

Short Run

A period of time during which at least one of a firm's inputs is fixed, limiting its ability to adjust to changes in demand or production costs.

Revenue and Cost Structure

The composition of a firm's income (revenue) versus its expenses (cost), impacting its profitability and financial strategy.