When utilizing the percentage of sales approach, managers need to identify which expenses are
variable and which are ﬁxed.

Question

Quizplus · Accepted Answer

This is true because the percentage of sales approach calculates expenses as a percentage of sales. In order to do this correctly, managers must distinguish between variable expenses (which fluctuate with sales) and fixed expenses (which stay constant regardless of sales).

When Utilizing the Percentage of Sales Approach, Managers Need to Identify