Question

Under Variable costing, fixed expenses: Select one: a. Are subtracted from sales to arrive at the contribution margin b. Are subtracted from sales to arrive at the gross profit c. Are expensed in the current period d. A and C

Answer 1

The answer is C. Are expensed in the current period

Step-by-step explanation:

Under variable costing, fixed expenses is treated as a period cost and is expensed in the current period's income statement.

Option A is incorrect because variable cost and not fixed cost cost are subtracted from sales to arrive at contribution margin

Option B is also incorrect because cost of sales and not fixed cost/expenses are subtracted from sales to arrive at gross profit.