In an income statement prepared using variable costing, fixed manufacturing overhead would
A)not be used.
B)be used in the computation of net operating income but not in the computation of the contribution margin.
C)be used in the computation of the contribution margin.
D)be treated the same as variable manufacturing overheaD.

Question

Quizplus · Accepted Answer

Fixed manufacturing overhead is not included in the cost of goods sold or in the computation of the contribution margin under variable costing. Instead, it is treated as a period cost and expensed in its entirety in the period incurred, affecting the net operating income but not the contribution margin.

In an Income Statement Prepared Using Variable Costing, Fixed Manufacturing