The Gross Margin Ratio Is Defined as Gross Margin Divided

question 177

True/False

The gross margin ratio is defined as gross margin divided by net sales.

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Definitions:

Cost Object

Any item for which cost is measured and assigned, such as products, services, or departments.

Plantwide Overhead Rate

A single overhead rate calculated for an entire manufacturing plant, used to allocate overhead costs to products.

Direct Labor Hours

The total hours worked by employees directly involved in the production process, used in calculating cost allocations and efficiency.

Allocation Base

A criterion or measure used for distributing or apportioning costs among various cost objects in a fair, equitable, and rational manner.