Direct product profitability equals an item's ________.
A) annual sales divided by the total linear footage devoted to a product category
B) gross profit less its direct retailing costs (but not including general overhead)
C) annual gross profit divided by the total linear footage devoted to the item
D) number of days of supply on the shelf

Question

Quizplus · Accepted Answer

Direct product profitability is the measure of an item's profitability by subtracting its direct retailing costs from its gross profit, but not including general overhead expenses. Option A is incorrect because it measures an item's sales efficiency by dividing its annual sales by the linear footage devoted to the product category. Option C is incorrect because it measures the profitability of an item by dividing its annual gross profit by the total linear footage devoted to the item, ignoring direct costs of retailing. Option D is also incorrect because it only measures an item's inventory efficiency by calculating the number of days of supply on the shelf.

Direct Product Profitability Equals an Item's ________