In a traditional format income statement for a merchandising company, cost of goods sold is a variable cost that is included in the "Variable expenses" portion of the income statement.

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Cost of goods sold is a major expense item in a merchandising company's income statement, but it is not considered a variable expense. It is a direct cost specifically related to the products that were sold during the period, and is usually listed as a separate expense item before the section for variable expenses.

In a Traditional Format Income Statement for a Merchandising Company