Question

The preferred format for a segmented income statement emphasizes:

1) direct and common fixed costs.
2) variable and fixed costs.
3) operating expenses and fixed costs.
4) variable costs and operating expenses.

Answer 1

The preferred format for a segmented income statement emphasizes variable costs and operating expenses. The correct option is 4)

Step-by-step explanation:

The preferred format for a segmented income statement emphasizes variable costs and operating expenses. Segmented income statements divide a company's revenue and expenses into different segments or categories, providing a clearer picture of the financial performance of each segment. In this format, the emphasis is on variable costs, which are costs that change with the level of production or sales, and operating expenses, which include costs related to the day-to-day operation of the business.

By highlighting variable costs and operating expenses, the segmented income statement helps management make informed decisions about pricing, cost control, and resource allocation for each segment of their business.