Which inventory costing method calculates contribution margin instead of gross margin?

Question

Quizplus · Accepted Answer

Variable costing calculates contribution margin instead of gross margin because it only considers the variable costs associated with producing the goods sold when assigning costs to inventory. Fixed costs are treated as period expenses under variable costing and are not included in the calculation of cost of goods sold. This means that the contribution margin, which is equal to revenue minus variable costs, is a more relevant measure of profitability than gross margin under this method.

Which Inventory Costing Method Calculates Contribution Margin Instead of Gross