Gross margin can be increased by
A) selling more merchandise.
B) buying less merchandise.
C) increasing unit sales prices.
D) reducing operating expenses.

Question

Quizplus · Accepted Answer

Gross margin is calculated as sales revenue minus the cost of goods sold (COGS), and it represents the profit made on goods before operating expenses are considered. Increasing unit sales prices directly increases the revenue per unit, thereby potentially increasing the gross margin if the cost of goods sold remains constant or increases at a slower rate. Selling more merchandise (A) and buying less merchandise (B) affect volume but not directly the margin per unit, and reducing operating expenses (D) affects net profit rather than gross margin.

Gross Margin Can Be Increased by