The Percentage of Sales Method Produces Accurate Results Unless Which

Multiple Choice

The percentage of sales method produces accurate results unless which of the following conditions is (are) present?

A) Fixed assets are "lumpy."
B) Strong economies of scale are present.
C) Excess capacity exists because of a temporary recession.
D) Answers a, b, and c all make the percentage of sales method inaccurate.
E) Answers a and c make the percentage of sales method inaccurate, but, as the text explains, the assumption of increasing economies of scale is built into the percentage of sales method.