In Income Statements Prepared Under Absorption Costing and Variable Costing $\quad$

question 5

Short Answer

In income statements prepared under absorption costing and variable costing, where would you find the terms contribution margin and gross profit? $\quad$$\quad$$\quad$$\quad$$\begin{array}{llcc} \underline{ \text { Contribution margin } }&\quad\quad\quad\quad\quad \underline{ \text { Gross profit } }\\\end{array}$
a) $\begin{array}{llcc} \text {in absorption-costing income statement } & \text { in variable-costing income statement} \\\end{array}$
b) $\begin{array}{llcc} \text { in absorption-costing income statement } & \text { in both income statements} \\\end{array}$
c) $\begin{array}{llcc} \text { in variable-costing income statement } & \text { in absorption-costing income statement } \\\end{array}$
d) $\begin{array}{llcc} \text { in both income statements } & \quad\quad\quad\quad\quad\text { In variable-costing income statement} \\\end{array}$

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Definitions:

Monetary Assets

Assets that hold a fixed monetary value, including cash and assets that can be easily converted into cash.

Current Rate

The present interest rate, exchange rate, or other financially relevant rate that is applicable to a financial instrument or transaction.

Goodwill Impairment

The financial recognition that the value of the goodwill acquired in a business combination has decreased, indicating that the carrying value of the goodwill is no longer supported by the future economic benefits it was expected to generate.

Reporting Unit

A component of an entity for which discrete financial information is available and is reviewed regularly by the operating segment's management.