Accounting Multiple Choice Question – 12 March 2023

Alex plc has calculated the following accounting ratios for the year ended 30 June:

• Gross Profit Margin% – 30% for 2005 and 33% for 2006
• Profit in Relation to Revenue% – 15% for 2005 and 14% for 2006

What could explain the changes in the percentages?

Select ONE answer:

1. A fall in interest payments was equal to an increase in administration costs.
2. An increase in raw material costs was covered by an increase in selling price.
3. An increase in the advertising budget has allowed the firm to increase the selling price.
4. An increase in the advertising budget has led to a rise in sales volume.

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 3

1. Not correct
2. Not correct
3. Correct
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.