Question

The gross profit ratio is useful to the manager for each of the following purposes except...

The gross profit ratio is useful to the manager for each of the following purposes except that:

  • it can be used to determine the selling price to set for an item.

  • it can be used to estimate the amount of inventory lost in a fire.

  • it can be used to estimate the amount of operating expenses for a period.

  • it can be used to determine the amount available from a given amount of revenue to cover operating expenses.

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Answer #1

Solution: The Answer is "It can be used to estimate the amount of operating expenses for a period."

Explanation:

1) Gross profit ratio is not useful and it can`t be used to estimate the amount of operating expenses for a period because gross profit tells about differs between revenue and cost of goods sold and operating expenses are no where covered under the gross profit calculation.

2) Remaining options are related to gross profit ratio.So, There are Incorrect.

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