Which of the following statements is incorrect?
A) If selling and administrative expenses as a percentage of sales increases, then gross profit percentage will decrease.
B) If the cost of goods sold percentage decreases and other expenses do not change, then profit margin will increase as a percentage of sales.
C)If sales dollars decrease, a company might still report a higher gross profit percentage if cost of goods sold decreases at a faster rate than the decrease in sales.
D)It is possible that when selling and administrative expense in dollars decrease, selling and administrative expenses as a percentage of sales will increase.

Question

Quizplus · Accepted Answer

Gross profit percentage is calculated as (Sales - Cost of Goods Sold) / Sales. Selling and administrative expenses do not affect gross profit percentage directly, as they are not part of the cost of goods sold.

Which of the Following Statements Is Incorrect