How will a percentage of sales model treat cost of goods sold if sales revenues are expected to grow by 20% to $1 million next year? Cost of goods sold will:

Question

Quizplus · Accepted Answer

In a percentage of sales model, cost of goods sold is directly proportional to sales revenues. Therefore, if sales revenues are expected to grow by 20%, cost of goods sold will also grow by the same proportion to remain proportionate to sales.

How Will a Percentage of Sales Model Treat Cost of Goods