An income statement in absorption costing follows the format of ___________?
Correct answer: C. Gross margin
- A. inventory margin
- B. sales margin
- C. Gross margin
- D. production margin
Explanation
An absorption-costing income statement classifies costs by function and reports sales less cost of goods sold to produce gross margin. A contribution-margin format is associated mainly with variable costing.
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About Cost Accounting
Cost accounting measures and analyses the cost of producing goods or providing services for planning, control and pricing decisions. It covers direct and indirect costs, fixed and variable costs, job and process costing, break-even analysis, marginal costing, overhead allocation, and the difference between product cost and period cost.
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