What Is the Relationship Between Gross Margin and Net Income

question 129

Multiple Choice

What is the relationship between gross margin and net income?

• A) Gross Margin - Merchandise Inventory at the end of the period = Net Income
• B) Gross Margin - Selling and Administrative Expenses = Net Income
• C) Gross Margin + Selling and Administrative Expenses = Net income
• D) Sales Revenue x Gross Margin Percentage = Net Income

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Definitions:

Maximizes Profit

A strategy or action aimed at increasing the difference between total revenue and total costs to the highest possible level.

Constraints

are limitations or restrictions that affect the strategies and outcomes of a decision-making process or production operation.

Region Of Optimality

The set of all solutions that optimizes a given objective function within a feasible region.

Iso-Profit Line

A graphical representation in managerial economics that shows combinations of different products or inputs that yield the same level of profit.