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Olivia Kocko
on Dec 17, 2024

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On the variable costing income statement, the amounts representing the difference between the contribution margin and operating income are the fixed manufacturing costs and fixed selling and administrative expenses.

Variable Costing

Variable Costing is a costing method that only includes variable costs (direct materials, direct labor, and variable manufacturing overhead) in product costs, excluding fixed manufacturing overhead.

Contribution Margin

The amount by which sales revenue exceeds variable costs of production, indicating how much contributes to covering fixed costs and generating profit.

Operating Income

A measure of a company's profitability from its regular business operations, excluding income and expenses from unusual or non-operational activities.

  • Identify the elements and importance of contribution margin in the decision-making process.
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AC
Ashley ChongDec 21, 2024
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