Which of the following terms would be found on an Income Statement using absorption costing?
A)Contribution margin
B)Variable manufacturing overhead
C)Fixed manufacturing overhead
D)Gross profit

Question

Quizplus · Accepted Answer

Absorption costing includes all manufacturing costs, both fixed and variable, in the cost of each unit produced. As a result, gross profit is calculated by subtracting the cost of goods sold (which includes both variable and fixed manufacturing costs) from the total sales revenue on the income statement. Contribution margin would only be found on a variable costing income statement, and variable manufacturing overhead and fixed manufacturing overhead would be included in the cost of goods sold calculation.

Which of the Following Terms Would Be Found on an Income