MP Co.'s gross profit percentage decreased from 59.2% in 2011 to 58.3% in 2012.This means that MP Co.'s cost of goods sold as a percentage of sales has decreased.

Question

Quizplus · Accepted Answer

The gross profit percentage is calculated by subtracting the cost of goods sold from total revenue and then dividing by total revenue. Therefore, if the gross profit percentage decreased, it means that either the cost of goods sold increased or total revenue decreased. The statement that the cost of goods sold as a percentage of sales has decreased is incorrect as it implies that the cost of goods sold has decreased when in fact it could have increased.

MP Co'S Gross Profit Percentage Decreased from 59