Final answer:
Statement I, II, and III about absorption-costing and variable-costing income statements are all true. Absorption costing includes fixed costs in COGS, variable costing shows contribution margin, and variable selling and administrative costs are the same under both methods.
Step-by-step explanation:
The student's question refers to the validity of statements concerning absorption-costing and variable-costing income statements and their components. To answer the question:
- Statement I is true because a variable-costing income statement does indeed disclose a firm's contribution margin, which is sales revenue minus variable costs.
- Statement II is also true as the cost of goods sold (COGS) on an absorption-costing income statement includes both variable and fixed costs.
- Statement III is true because the amount of variable selling and administrative costs remains the same whether using absorption-costing or variable-costing since these costs are not affected by the method used to handle fixed manufacturing overhead.
The short-run analysis of total costs breaks them down into fixed costs and variable costs, providing insights into a firm's cost behavior and pricing decisions. This breakdown is key in understanding the differences between absorption and variable costing methods on income statements.