Question

One element of a contribution income statement that differs from a functional income statement is:

	a.	Direct materials are split between variable and fixed costs
	b.	Overhead is defined as both fixed and variable
	c.	Per unit sales commissions are always considered fixed
	d.	No difference. These are different terms for the same thing

Answer 1

Correct option
b.	Overhead is defined as both fixed and variable
In contribution income statement the expenses are
divided as variable and fixed expenses and
presented as
Sales
Less: Variable expenses
Contributina mArgin
Less: Fixed expenses
Net operating Income
Hence the overhead cost is divided into two parts
fixed and variable
While in functional income statement overhead
is a part of Cost of good sold and both fixed and
variable are included in it
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