Asked by Sophia Chiang on Jun 17, 2024
Verified
On the variable costing income statement, variable costs are deducted from contribution margin to yield manufacturing margin.
Variable Costing Income Statement
A financial statement showing the costs that vary directly with the level of production, separated from fixed costs.
Variable Costs
Costs that vary in relation to a company's operations.
Manufacturing Margin
The difference between the cost of goods manufactured and the sales revenue generated from those goods.
- Understand the effects of variable and absorption costing on the depiction of gross profit, contribution margin, and net profit in the income statement.
Verified Answer
KG
Kenia GarciaJun 18, 2024
Final Answer :
False
Explanation :
On the variable costing income statement, sales revenue is first reduced by variable costs to calculate the contribution margin, not the other way around.
Learning Objectives
- Understand the effects of variable and absorption costing on the depiction of gross profit, contribution margin, and net profit in the income statement.
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