The correct answer is D. All of these.
Gross profit is the difference between sales revenue and cost of goods sold. It is a measure of a company’s profitability and is often used to evaluate its performance. The gross profit percentage is calculated by dividing gross profit by sales revenue. It is a measure of a company’s ability to generate profit from its sales. The contribution ratio is calculated by dividing contribution margin by sales revenue. It is a measure of a company’s ability to generate profit from its sales, after taking into account the cost of goods sold and variable expenses.
Here is a more detailed explanation of each option:
- Option A: The difference between sales revenue and cost of goods sold, is known as ‘Gross Profit’.
Gross profit is the difference between sales revenue and cost of goods sold. It is a measure of a company’s profitability and is often used to evaluate its performance. Gross profit is calculated by the following formula:
Gross profit = Sales revenue – Cost of goods sold
- Option B: The gross profit percentage is the average profit margin obtained on goods sold.
The gross profit percentage is calculated by dividing gross profit by sales revenue. It is a measure of a company’s ability to generate profit from its sales. The gross profit percentage is calculated by the following formula:
Gross profit percentage = Gross profit / Sales revenue
- Option C: The relationship of contribution to sales is known as contribution ratio.
The contribution ratio is calculated by dividing contribution margin by sales revenue. It is a measure of a company’s ability to generate profit from its sales, after taking into account the cost of goods sold and variable expenses. The contribution ratio is calculated by the following formula:
Contribution ratio = Contribution margin / Sales revenue