Question

Alpine House Contribution Format Income Statement includes:

A) Only variable costs
B) Only fixed costs
C) Both variable and fixed costs
D) Neither variable nor fixed costs

Answer 1

An Alpine House Contribution Format Income Statement includes both variable and fixed costs. Variable costs vary with production levels, while fixed costs remain constant. The format reflects the total costs by summing these two categories. The correct answer is option C

Step-by-step explanation:

The question relates to a concept in managerial accounting concerning the composition of an income statement. Specifically, it asks what an Alpine House Contribution Format Income Statement includes. The contribution format income statement details both variable and fixed costs. Variable costs change with production levels, while fixed costs remain constant regardless of the levels of production. An example of a fixed cost is the rent of a factory, which does not change regardless of how much is produced, while an example of variable costs are expenses like labor, which increase with the level of production.

To directly answer the student's question, the answer is (C) Both variable and fixed costs. Alpine House Contribution Format Income Statement includes both variable costs and fixed costs. Total costs are calculated by adding these two types of costs together.