Table 18-2
Given the following data:
$\begin{array}{lr}
\text { Net sales } & \$ 100,000 \
\text { Cost of goods sold } & 50,000 \
\text { Gross margin } & \$ 50,000 \
\end{array}$
-Refer to Table 18-2.If net sales increased 15%,and cost of goods sold increased 20%,gross margin would:
A) increase 10%
B) decrease 15%
C) increase 20%
D) decrease 10%

Question

Table 18-2
Given the following data:
 $\begin{array}{lr}
\text { Net sales } & \$ 100,000 \
\text { Cost of goods sold } & 50,000 \
\text { Gross margin } & \$ 50,000 \
\end{array}$
-Refer to Table 18-2.If net sales increased 15%,and cost of goods sold increased 20%,gross margin would:
A) increase 10%
B) decrease 15%
C) increase 20%
D) decrease 10%

Quizplus · Accepted Answer

If net sales increase by 15%, they become $115,000 ($100,000 * 1.15). If the cost of goods sold increases by 20%, it becomes $60,000 ($50,000 * 1.20). The new gross margin would be $115,000 - $60,000 = $55,000. The increase in gross margin from the original $50,000 is $5,000, which is a 10% increase ($5,000 / $50,000).