To Create a Same Size Analysis, Calculate Each Line Item

question 17

Multiple Choice

To create a same size analysis, calculate each line item as a percentage of ________.

• A) Sales
• B) Income
• C) Costs
• D) Units
• E) None of the above

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Definitions:

Inventory

Items held for sale in the ordinary course of business, as well as supplies and materials used in producing goods for sale.

Gross Profit

The profit a company makes after deducting the costs associated with making and selling its products, or the costs associated with providing its services.

Absorption Costing

A pricing strategy that encompasses all expenses associated with production, including direct materials, direct labor, as well as both variable and fixed overhead costs, in the product's price.

Operating Income

A measure of a company's profitability from its core business operations, excluding revenue and expenses from non-operational activities.