In 2015,an Agricultural Company Introduced a New Cropping Process Which

question 118

Multiple Choice

In 2015,an agricultural company introduced a new cropping process which reduced the cost of growing some of its crops.If sales in 2014 and 2015 were steady at $25 million,but the gross margin increased from 2.3% to 3.4% between those years,by what amount was the cost of sales reduced?

• A)$275,000
• B)$325,000
• C)$425,000
• D)$575,000
• E)$850,000

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Definitions:

Sales Units

The quantity of product sold, often used as a measure in assessing sales performance and operational efficiency.

Fixed Expenses

Costs that do not change with the level of production or sales over the short term, such as rent, salaries, and insurance.

Break-even Point

The break-even point is the sales level at which total revenues equal total costs, resulting in neither profit nor loss.

Degree of Operating Leverage

A financial ratio that measures the sensitivity of a company's operating income to its sales volume, showing the impact of fixed costs on earnings.