Question

Variable costing income statements separate (1) expenses from (2) expenses. (Enter only one word per blank.)

Answer 1

Variable costing income statements separate variable expenses from fixed expenses. By separating these two types of expenses, variable costing helps companies assess the profitability of products or services by considering only the costs that vary with production.

Step-by-step explanation:

Variable costing income statements separate variable expenses from fixed expenses. Variable expenses are costs that change with the level of production, such as direct materials and direct labor. Fixed expenses are costs that do not change regardless of the level of production, such as rent and salaries. By separating these two types of expenses, variable costing helps companies assess the profitability of products or services by considering only the costs that vary with production.