Net income under variable costing is contribution margin less
A) cost of goods sold.
B) fixed manufacturing overhead and fixed selling and administrative expenses.
C) fixed manufacturing overhead and variable manufacturing overhead.
D) variable selling and administrative expenses and fixed selling and administrative expenses.

Question

Quizplus · Accepted Answer

Net income under variable costing is calculated by subtracting both fixed manufacturing overhead and fixed selling and administrative expenses from the contribution margin. Variable costing includes all variable costs in the cost of goods sold and treats fixed manufacturing overhead as a period expense.

Net Income Under Variable Costing Is Contribution Margin Less