ANALYSIS OF CHANGES IN SALES, COST OF SALES AND GROSS MARGIN

QUIZ

Test I: Multiple Choice- Theories

1. It reveals the amount that an entity earns from the sale of its products and services, before the
deduction of any selling and administrative expenses.
a. Gross Margin
b. Sales
c. Gross Profit
d. Both A and C

2. All are importance of Gross Margin Analysis except;

a. To determine the causes of changes in gross margin.
b. To determine the causes of changes in cost of good sold
c. To find remedies how to correct the weaknesses in the years operating performance.
d. To determine the causes of changes in net sales.
3. The actual Gross Profit during a given period may be compared with any of the following;
a. The immediately preceding periods figures or any figures selected as the base for
comparison
b. The same periods budgeted or standard figures
c. Both A and B
d. None of the above
4. It is an indispensable tool in controlling operations because the adequacy or inadequacy of
gross profit determines the final results of operations.
a. Analysis of variation in Sales
c. Analysis of variation in Gross Profit
b. Analysis of variation in Cost of Sales
d. Gross Profit
5. The factors affecting sales, cost of sales and gross profit are:
a. Single Product Analysis
c. Product Mix Analysis
b. Double Product Analysis
d. Both A and C

6. All are true except;

a. Management becomes able to outline the remedies that should correct the situation. The
planned gross profit is the responsibility of the marketing as well as the
manufacturing department.
b. The cost of sales analysis brings together these two major functional areas of the firm and
points to the need for further study by both of these department.
c. The gross profit analysis based on budgets and standards costs depicts the weak spots in
the years performance.
d. The gross profit analysis brings together these two major functional areas of the firm and
points to the need for further study by both of these department.

7. The cost of goods sold includes;

a. money a company earns in the normal cost of business
b. returns, allowances and discounts
c. direct cost of raw materials and labor involved in making the products
d. Both A and C
8. Refers to the money a company earns in the normal course of business
a. Sales
b. Net Sales
c. Cost of Sales
d. Gross Profit

9. Analyst usually use Gross Profit to calculate ______ which is the same metric but
represented as a percentage
a. Cost of Sales
b. Interest
c. Gross Profit Margin
d. Net Sales

10. This is your total sales revenue, minus a few things: returns, sales allowances and sales
discounts
a. Sales
b. Net Sales
c. Cost of Sales
d. Gross Profit