Which of the Following Statements Is True with Respect to the Gross

question 57

Multiple Choice

Which of the following statements is true with respect to the gross profit percentage?

• A)The gross profit percentage shows the relationship of net income to sales revenue.
• B)The gross profit percentage is widely regarded as the ultimate measure of overall accomplishment.
• C)Retailers have high gross profit percentages because product costs are their main expense.
• D)The gross profit percentage is useful to retailers in choosing a pricing strategy and in judging its results.
• E)Gross profit percentages vary very little across industries.

---

Definitions:

Standard Rate

A predetermined cost or charge that applies to a particular activity, operation, or product within a business environment.

Fixed Factory Overhead Volume Variance

A measure used in cost accounting to determine the difference between the budgeted and actual volume of production, affecting fixed overhead costs.

Standard Costs

Standard costs are the predetermined costs associated with manufacturing a product or delivering a service, used as benchmarks to measure performance.

Actual Costs

The real expenses incurred in the production or acquisition of goods and services.