If you assume that total costs represent a constant percentage of sales, you are automatically assuming that the _________ is constant.

Question

Quizplus · Accepted Answer

Assuming that total costs represent a constant percentage of sales means that the profit margin (net income divided by sales) will be constant. This is because the total costs (including variable and fixed costs) are deducted from sales to arrive at net income, which is then divided by sales to obtain the profit margin.

If You Assume That Total Costs Represent a Constant Percentage