Question

Consider the following comments about absorption- and variable-costing income statements:

I. A variable-costing income statement discloses a firm's contribution margin.

II. Cost of goods sold on an absorption-costing income statement includes fixed costs.

III. The amount of variable selling and administrative cost is the same on absorption- and variable-costing income statements.

Which of the above statements is (are) true?

I only.

II only.

I and II.

II and III.

I, II, and III.

Answer 1

The answer is

All I, II, III are True

The detailed explanation is attached in below picture

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Page The answer is. TRUE : I, I and lor Reason: All Of 3 statements are true 1] Variable cost income statemente consider costs against sales, only which are variable costs. Hencé it looks like Cor Sales o XXX Less: Variable cost (xxx) 20 Income or Contribution - xxx T] Absorption costing coe begged cap includio both variable & fixed cost. The fixed cost is allocaled based on units produced sor As absorption costing includes fixed cost the cost of goods sold includes fixed cost ales. 1 The variable costs are included in both variable & & costing income statement of absorption

costing income statement. The per whit Variable cost romain same in both statements. Thus the variable selling & admin cost ancluded in both statemente