The gross-margin format of the income statement:
A)is used with variable costing
B)is used with absorption costing
C)calculates contribution margin
D)distinguishes variable costs from fixed costs

Question

Quizplus · Accepted Answer

The gross-margin format of the income statement is used with absorption costing, where all manufacturing costs are included in the cost of goods sold. This format calculates gross margin by subtracting cost of goods sold from net sales, and then provides a breakdown of operating expenses to calculate operating income.

The Gross-Margin Format of the Income Statement