One element of a contribution income statement that differs from a functional in

Question

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

Direct materials are split between variable and fixed costs

Overhead is defined as both fixed and variable

Per unit sales commissions are always considered fixed

No difference. These are different terms for the same thing

Direct materials are split between variable and fixed costs

Overhead is defined as both fixed and variable

Per unit sales commissions are always considered fixed

No difference. These are different terms for the same thing

Explanation / Answer

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 If any doubt please comment. If satisfied you can rate the answer

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