In an income statement prepared as an internal report using the variable costing method,fixed manufacturing overhead would
A)not be used.
B)be used in the computation of 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

Under the variable costing method, fixed manufacturing overhead is not included in the cost of goods sold or in the computation of the contribution margin. Instead, it is treated as a period cost and is expensed in its entirety in the period incurred. Therefore, it affects the operating income but not the contribution margin.

In an Income Statement Prepared as an Internal Report Using