Pixie Products reported net sales revenue of $18.8 billion and cost of goods sold of $5.6 billion,while Stardust Inc.reported net sales revenue of $22.3 billion and cost of goods sold of $9.3 billion.Which of the following statements is correct?
A)While Stardust Inc.generated more revenue than Pixie Inc. ,Stardust Inc.generated a lower gross profit percentage.
B)Pixie Inc.generated a lower gross profit percentage because its sales revenue was lower.
C)Stardust Inc.did a better job of controlling product costs as a percentage of sales than did Pixie Inc.
D)The selling price of the products sold by Pixie Inc.must have been higher than the price of products sold by Stardust Inc.

Question

Quizplus · Accepted Answer

Gross profit percentage = [(Net sales − Cost of goods sold)÷ Net sales] × 100
Pixie:
= [($18.8 − $5.6)÷ $18.8] × 100 = 70.2%
Stardust:
= [($22.3 − $9.3)÷ $22.3] × 100 = 58.3%
While Stardust Inc.generated more revenue than Pixie Inc. ,Stardust Inc.generated a lower gross profit percentage.Differences in gross profit percentages are due to differences in the selling prices and/or differences in product costs.

Pixie Products Reported Net Sales Revenue of $18