Answer the following questions using the information below:
Queanbeyan Company incurred fixed manufacturing costs of $7200 during 2018.Other information for 2018 includes:
The budgeted denominator level is 800 units.
Units produced total 1000 units.
Units sold total 950 units.
Beginning inventory was zero.
The fixed manufacturing cost rate is based on the budgeted denominator level.Manufacturing variances are closed to cost of goods sold.
-When variable costing is used,an income statement will show gross margin.

Question

Quizplus · Accepted Answer

Under variable costing, there is no gross margin shown on the income statement. Instead, it shows contribution margin, as fixed manufacturing costs are treated as period costs and not included in the cost of goods sold.

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