Final answer:
Inventory carrying expense would be classified as a variable cost on the income statement, as it varies with the level of inventory held by the company. The correct option is a. Expense Inventory Carry
Step-by-step explanation:
On an income statement, variable costs are those that change in proportion to the level of production or sales volume. Examples of variable costs include costs for raw materials and labor used in the production of goods.
Considering the options given in the question, inventory carrying expense is the one that would be classified as a variable cost most directly. Inventory carrying costs include expenses related to storing unsold goods and these costs typically vary with the amount of inventory a company holds.
Fixed costs, on the other hand, do not vary with the level of production or sales volume. This would include expenses such as depreciation and possibly promotion expenses to some extent, which are considered fixed as they do not change with the quantity of goods produced or sold.
R&D (Research & Development) expense is generally also considered a fixed cost as it does not typically vary directly with production volume, though it can vary with business strategy. The correct option is a. Expense Inventory Carry