If, over a three-year period, sales increased by 30%, and cost of goods sold increased by 45%,
A)the sales trend is unfavourable, but the cost of goods sold trend is favourable.
B)the sales trend is favourable, but the cost of goods sold trend is unfavourable.
C)both trends are favourable.
D)both trends are unfavourable.

Question

Quizplus · Accepted Answer

An increase in sales is generally considered favourable as it indicates growth in revenue. However, an increase in the cost of goods sold (COGS) is considered unfavourable because it reduces profit margins. Therefore, a situation where sales increase more modestly than COGS suggests a negative trend in profitability, making the sales trend favourable and the COGS trend unfavourable.

If, Over a Three-Year Period, Sales Increased by 30%, and Cost