On the variable costing income statement,the difference between the "contribution margin" and "income before income taxes" is equal to
A)the total variable costs.
B)the Cost of Goods Sold.
C)total fixed costs.
D)the gross margin.

Question

Quizplus · Accepted Answer

The contribution margin represents the amount of revenue remaining after variable costs have been deducted. Therefore, it only covers variable costs and does not include fixed costs. The income before income taxes includes both fixed and variable costs and represents the overall profitability of the company. The difference between the contribution margin and income before income taxes is equal to the total fixed costs.

On the Variable Costing Income Statement,the Difference Between the "Contribution