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

Question

Quizplus · Accepted Answer

Variable administrative expenses are subtracted from total revenues to calculate contribution margin on the contribution income statement. However, on the absorption income statement, variable administrative expenses are included in the cost of goods sold and operating expenses, which are subtracted from total revenues to calculate gross margin and operating income. Therefore, choice B is the correct answer.

Variable Administrative Expenses Affect the Calculation of ________ on the Contribution