Which of the following statements is incorrect?

A) If selling and administrative expenses as a percentage of sales increases,then gross profit percentage will decrease.
B) If the cost of goods sold percentage decreases and other expenses do not change,then net profit margin will increase as a percentage of sales.
C) If sales dollars decrease,a company might still report a higher gross profit percentage if cost of goods sold decreases at a faster rate than the decrease in sales.
D) It is possible that when selling and administrative expense in dollars decrease,selling and administrative expenses as a percentage of sales will increase.

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Amanda Plevick · Accepted Answer

Final Answer : A, Explanation :  Gross profit percentage is calculated based on sales and cost of goods sold, not on selling and administrative expenses. Therefore, changes in selling and administrative expenses as a percentage of sales do not directly affect the gross profit percentage.

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