The gross-margin format of the income statement:
A)is used with variable costing.
B)distinguishes variable costs from fixed costs.
C)is used with absorption costing.
D)calculates contribution margin.

Question

Quizplus · Accepted Answer

The gross-margin format of the income statement is used with absorption costing. This format shows the company's revenues, the cost of goods sold (which includes both variable and fixed costs), and the gross margin (which is the difference between the revenues and the cost of goods sold). This format is different from the contribution margin format, which only shows variable costs and contribution margin.

The Gross-Margin Format of the Income Statement