In an income statement prepared as an internal report using the variable costing method, variable selling and administrative expenses would
A)not be used.
B)be treated the same as fixed selling and administrative expenses.
C)be used in the computation of net operating income but not in the computation of the contribution margin.
D)be used in the computation of the contribution margin.

Question

Quizplus · Accepted Answer

Variable selling and administrative expenses are included in the computation of the contribution margin under variable costing. This is because the contribution margin is calculated as sales revenue minus variable expenses, which include variable selling and administrative expenses. Therefore, these expenses are directly related to the generation of revenues and are considered variable costs.

In an Income Statement Prepared as an Internal Report Using