To Compute the Gross Profit Percentage,divide

question 41

Multiple Choice

To compute the gross profit percentage,divide:

• A)sales by cost of goods sold.
• B)gross profit by net sales.
• C)net income by stockholders' equity.
• D)operating income by net sales.

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Definitions:

Operations

Activities involved in the day-to-day running of a business for the purpose of producing value for the stakeholders.

Variable Costing

An accounting method that includes only variable production costs—direct materials, direct labor, and variable manufacturing overhead—in the cost of goods sold.

Absorption Costing

A calculation approach that encompasses all expenses of production, such as materials, labor, and all overheads, both variable and fixed, in determining a product's price.

Variable Production Costs

Costs that vary directly with the level of production, such as raw materials and direct labor.