The period-to-period change in operating income under variable costing is driven by unit level of sales, if the contribution margin is constant.

Question

Quizplus · Accepted Answer

The period-to-period change in operating income under variable costing is driven by the unit level of sales because in variable costing, the fixed manufacturing costs are treated as period expenses and are not included in the cost of goods sold. Therefore, the change in operating income is primarily driven by the change in unit sales, assuming the contribution margin remains constant.

The Period-To-Period Change in Operating Income Under Variable Costing Is