A direct-costing income statement has a subtotal for ________ whereas an absorption-costing income statement has a subtotal for ________.
A)gross profit; contribution margin
B)contribution margin; gross profit
C)variable expenses; fixed expenses
D)fixed expenses; variable expenses

Question

Quizplus · Accepted Answer

A direct-costing income statement calculates contribution margin, which is the difference between total revenue and total variable expenses. An absorption-costing income statement calculates gross profit, which is the difference between total revenue and total cost of goods sold (including both variable and fixed manufacturing overhead). Therefore, choice B is the correct answer.

A Direct-Costing Income Statement Has a Subtotal for ________ Whereas