Given a constant contribution margin per unit and constant fixed costs, the period-to-period change in operating income under variable costing is driven solely by ________.
A) changes in the quantity of units actually sold
B) changes in the quantity of units produced
C) changes in ending inventory
D) changes in sales price per unit

Question

Quizplus · Accepted Answer

In variable costing, the fixed costs are expensed in the period they are incurred, while the contribution margin per unit remains constant. Therefore, the period-to-period change in operating income is driven solely by changes in the quantity of units actually sold. The quantity of units produced and changes in ending inventory do not have a direct impact on operating income under variable costing. Changes in sales price per unit would affect the contribution margin per unit, but it is stated that the contribution margin is constant.

Given a Constant Contribution Margin Per Unit and Constant Fixed