Operating Margin Is the Same as Gross Margin in CVP

question 50

True/False

Operating margin is the same as gross margin in CVP analysis.

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Definitions:

Raw Materials Inventory

The stock of unprocessed inputs kept on hand by a manufacturing company for use in production.

Purchases

The acquisition of goods or services by a company in exchange for money, which are either used in the process of production or sold to customers.

Total Direct Materials

The sum cost of all raw materials that are directly traceable to the manufacturing of a product.

Raw Materials Used

The total value of all raw materials employed in the manufacturing process to produce finished goods during a specific accounting period.