Which of the following will appear as a line item in the income statement prepared under variable costing?
A)contribution margin
B)total cost of goods sold
C)work-in-process inventory
D)gross profit

Question

Quizplus · Accepted Answer

Contribution margin is a key calculation used in variable costing to determine the profitability of a product or service. It is calculated by subtracting the variable costs of production from the total revenues generated by the product or service. Therefore, it would appear as a line item in the income statement prepared under variable costing.

B) Total cost of goods sold is not necessarily a line item in the income statement prepared under variable costing since it could include both fixed and variable costs.

C) Work-in-process inventory is not a line item in the income statement.

D) Gross profit is not a line item in the income statement prepared under variable costing since it includes both fixed and variable costs.

Which of the Following Will Appear as a Line Item