In 2012, Smith's Corner Store had an increase in gross margin of $28,000; however, the gross margin percentage decreased.This is most likely caused by:
A)a decrease in volume and a decrease in selling price
B)an increase in volume and an increase in selling price.
C)an increase in volume and a decrease in selling price.
D)a decrease in volume and an increase in selling price.

Question

Quizplus · Accepted Answer

An increase in volume and a decrease in selling price can lead to an increase in gross margin in dollar terms due to higher sales volume, but the gross margin percentage can decrease if the selling price reduction impacts the margin rate more significantly than the volume increase.

In 2012, Smith's Corner Store Had an Increase in Gross