The gross margin estimation method estimates the cost of goods sold by
A)multiplying the sales revenue by cost-to-sales ratio.
B)multiplying the cost of goods available by the gross margin percentage.
C)multiplying the costs to sales ratio by purchases.
D)multiplying the sales revenue by the inventory turnover ratio.

Question

Quizplus · Accepted Answer

The gross margin estimation method estimates the cost of goods sold by multiplying the sales revenue by the cost-to-sales ratio. This approach uses the relationship between sales and the cost of goods sold to estimate either figure when the other is known.

The Gross Margin Estimation Method Estimates the Cost of Goods