Variable selling expenses affect the calculation of ________ on the contribution income statement.Variable selling expenses do NOT affect the calculation of ________ on the absorption income statement.
A) gross margin; contribution margin
B) operating income; contribution margin
C) contribution margin; gross margin
D) gross margin; operating income

Question

Quizplus · Accepted Answer

Variable selling expenses are deducted from the revenue to calculate the contribution margin on the contribution income statement. However, on the absorption income statement, variable selling expenses are included in the cost of goods sold and, therefore, do not affect the calculation of the gross margin. Instead, variable selling expenses impact the calculation of operating income on the absorption income statement.

Variable Selling Expenses Affect the Calculation of ________ on the Contribution