Which of the Following Is Not True Regarding the Components

question 125

Multiple Choice

Which of the following is not true regarding the components of the income statement?

• A)Cost of goods sold represents the total cost, excluding shipping, of the merchandise sold during the accounting period.
• B)Gross profit margin is calculated by dividing gross profit by net sales revenue.
• C)Operating expenses include those costs that contribute directly to the manufacture and distribution of goods.
• D)A and B above

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Definitions:

Marginal Cost Curve

This curve illustrates the change in the total cost that arises when the quantity produced is incremented by one unit. It is the graphical representation of the marginal cost of production as the amount produced changes.

ATC

Average Total Cost, which is the total cost of production (including both fixed and variable costs) divided by the number of units produced.

AVC

stands for Average Variable Cost, which is the total variable cost divided by the quantity of output produced.

MC

Marginal Cost, the increase in total cost that arises from producing one additional unit of a good or service.