Assume you are using net sales as the base in vertical analysis.Cost of goods sold in 2016 is 67%,and is 70% in 2017.This would always indicate that:
A) gross margin has declined
B) cost of goods sold as a percentage of net sales has increased
C) the dollar amount of cost of goods sold has increased
D) gross margin has declined, cost of goods sold as a percentage of net sales has increased, and the dollar amount of cost of goods sold has increased

Question

Quizplus · Accepted Answer

When cost of goods sold as a percentage of net sales increases over two years, it indicates that the cost of producing and selling goods has increased relative to the revenue generated from those goods. This does not necessarily mean that the gross margin has declined or that the dollar amount of cost of goods sold has increased, as those could depend on changes in other factors such as pricing or production efficiency.

Assume You Are Using Net Sales as the Base in Vertical