Presented Below Are the Major Categories or Captions That Would

question 16

Essay

Presented below are the major categories or captions that would appear on an income statement prepared in the variable costing format:
Contribution margin Fixed costs
Income from operations Manufacturing margin Sales
Variable cost of goods sold
Variable selling and administrative expenses
a Arrange the above captions in the proper order in accordance with the variable costing concept.
b Which of the captions represents 1 the difference between sales and the total of all the variable costs and expenses and 2 the remaining amount of revenue available for fixed manufacturing costs, fixed expenses, and net income?

---

Definitions:

Negative Slope

indicates a relationship in a graph where as one variable increases, the other variable decreases, showing an inverse correlation.

Production Possibilities

The various combinations of goods and services that can be produced within an economy when all resources are fully utilized.

Capital Goods

Long-term assets used by businesses to produce goods and services, such as machinery and buildings.

Consumer Goods

Items produced for direct consumption by the end consumer.