If sales have decreased in the past 5 years and the cost of goods sold value remains the same each year, this will create
A) an increase in gross profit margin.
B) an increase in profit margin.
C) a decrease in gross profit margin.
D) a decrease in cost of goods sold.

Question

Quizplus · Accepted Answer

A decrease in sales with constant cost of goods sold leads to a decrease in gross profit margin, as gross profit margin is calculated by subtracting the cost of goods sold from sales and then dividing by sales. With lower sales and unchanged cost of goods sold, the margin decreases.

If Sales Have Decreased in the Past 5 Years and the Cost