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Multiple Choice

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If a company's per unit cost of inventory purchases increased during the year yet cost of goods sold as a % of sales revenues was lower than the prior year, then the current year

a) gross margin as a % of sales revenues must have decreased
b) sales price per unit must have increased
c) sale volume must increased
d) both b and c

Solution Preview

a) gross margin as a % of sales revenues must have decreased

Since the cost of goods sold as a % of sales revenue is lower, this implies that the gross margin is higher ...

Solution Summary

The solution explains the correct alternative from the given choices relating to inventory

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