Peg Had Net Sales of $28,496 Million, Its Cost of Goods

question 21

Multiple Choice

Peg had net sales of $28,496 million, its cost of goods sold was $19,092 million, and its net income was $997 million. Its gross margin ratio equals:

• A) 3.5%.
• B) 5.2%.
• C) 33%.
• D) 67%.
• E) 149.3%.

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Definitions:

Activity-Based Costing

A costing methodology that assigns costs to products and services based on the activities and resources that go into their production.

Activity-Based Costing System

A costing methodology that assigns costs to products or services based on the activities and resources that go into producing them, aiming for more accurate product costing.

Direct Materials Cost

The cost of raw materials that are directly used in the manufacturing of a product.

Activity-Based Costing

A costing approach that allocates overhead and indirect expenses to distinct activities, offering a more precise cost estimation for products.