In 2001, Home Depot's cost of goods sold percentage was 70.1% and its selling and store operating costs was 18.6% of sales. In 2000, their cost of goods sold percentage was 70.3% while its selling and store operating costs was 17.7% of sales. What effect would the change in these percentages have on 2001's gross margin percentage and profit margin percentage?
A. Cost of goods sold would increase gross margin and profit margin percentages but selling and store operating costs would decrease gross margin and profit margin percentages.
B. Cost of goods sold would decrease gross margin and profit margin percentages but selling and store operating costs would increase gross margin and profit margin percentages.
C. Cost of goods sold would increase gross margin and profit margin percentages but selling and store operating costs would decrease the profit margin percentage.
D. Cost of goods sold would decrease gross margin and profit margin percentages but selling and store operating costs would increase profit margin percentage.
Ans: C. Cost of goods sold would increase gross margin and profit margin percentages but selling and store operating costs would decrease the profit margin percentage.
You might also like to view...
What recently available technology causes the most harm?
A. The monitoring of employees' every key stroke B. Telecommunications C. E-mails D. Documents written on employee machines
Lily's Pastries produces cupcakes, which sell for $5 each. During the current month, Lily produced 2,800 cupcakes, but only sold 2,700 cupcakes. The variable cost per cupcake was $3 and the sales commission per cupcake was $0.50
Total fixed manufacturing costs were $1,400 and total fixed marketing and administrative costs were $1,200. What is the product cost per cupcake under absorption costing? A) $3.50 B) $5.50 C) $5.00 D) $3.00