Which of the following statements is true?
A)In stable industries, such as retailers, the gross profit margin is generally volatile from year to year.
B)Gross profit margin and operating profit margin are complements of each other and the two percentages add up to 100%.
C)Fixed costs do not vary proportionately with volume changes but remain the same within a relevant range of activity.
D)In capital intensive industries sales volume changes result in a stable gross profit margin.

Question

Quizplus · Accepted Answer

Fixed costs do not vary proportionately with volume changes but remain the same within a relevant range of activity. The other options are false. The gross profit margin is generally stable in stable industries such as retailers (not volatile), gross profit margin and operating profit margin are not complements of each other, and sales volume changes in capital intensive industries can lead to changes in the gross profit margin.

Which of the Following Statements Is True