Question

7. If net sales decrease and cost of goods sold increases, the gross profit percentage

O A. decreases.
O B. will change based upon the change in total assets.
OC. increases.
D. remains the same.

Answer 1

A. decreases.

Step-by-step explanation:

When provided with the sales figure and the costs of golds sold (COGS), the calculation of gross profit will be the sales revenue minus the cost of goods sold.

I.e., Sale revenue - COGS = gross profit.

IF sales revenue is high and the cost of goods is low, a business will have a gross profit. The business will make losses if the cost of good s sold is greater than sales.

If sales revenue reduces and COGS increases, the gross profit percentage will decrease.