When Sales Discounts in the Current Year Exceed Sales Discounts

question 41

Multiple Choice

When sales discounts in the current year exceed sales discounts in the prior year,assuming all else remains unchanged,what is the effect on the gross profit percentage?

• A)The percentage will not change or it will increase.
• B)The percentage will not change or it will decrease.
• C)The percentage will decrease.
• D)None of the answers are acceptable.

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Definitions:

Additive Manufacturing

A method that involves building items by depositing material in successive layers, widely referred to as 3D printing.

Fixed Set-Up Costs

Initial costs that do not vary with the level of production or sales, such as equipment purchases or facility leases, needing to be paid before production starts.

Economies of Scale

The savings businesses gain from operating at a larger scale, where the expense for each unit produced diminishes as the scale enlarges.

Short Run

A period in which at least one input in the production process is fixed, limiting the ability of a firm to adjust to changes in market demand.