Question

In 2018 deckers outside door gross profit restaurant was 42.4% while their competitors timberland percentage was 46.5% that which was the most likely reason for timberland higher percentage?

A ) lower selling price

B) lower operating expense like administrative expense

C) lower product cost as a percentage of sales

D) all of the answers are correct

Answer 1

The correct answer is option A. i.e. Lower selling price.

As the number of units sold might have increased due to decrease in selling price due to which the gross profit would have increased.

The option B is not correct as it includes administrative expense which is reduced from gross profit to get net profit. Therefore no impact on gross profit.

In option C we include allocated overheads in the product cost which is not used while calculating the gross profit.