A-LevelAccountingAnalysis and communication of accounting information9706/12 · Oct/Nov 2011 · Q231 Mark
A firm has calculated the following accounting ratios for the year ended 30 June: year ended 30 June 2010 30 June 2011 gross profit on sales 30% 33% net profit on sales 15% 14% What could explain the changes in the percentages?
Afall in interest payments was equal to an increase in administration costs.
BAn increase in raw material costs was covered by an increase in selling price.
CAn increase in the advertising budget has allowed the firm to increase the selling price.
DAn increase in the advertising budget has led to a rise in sales volume.
✓ Correct answer
C: An increase in the advertising budget has allowed the firm to increase the selling price.
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