Which of the Following Income Statement Formats Is Most Commonly

question 21

Multiple Choice

Which of the following income statement formats is most commonly used with flexible budgeting?

• A) Sales − Variable costs = Contribution margin; Contribution margin − Fixed costs = Net income
• B) Sales − Cost of goods sold = Gross margin; Gross margin − Operating expenses = Net income
• C) Sales − Manufacturing costs − Selling and administrative costs = Net income
• D) None of these answers are correct.

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Definitions:

Psychoanalysis

A therapeutic approach founded by Sigmund Freud focusing on unconscious mental processes and early childhood experiences.

Biological Roots

The genetic, neurochemical, and physiological bases of behavior and mental processes, emphasizing the role of nature in psychology.

What We Know

A phrase indicating the extent of knowledge and understanding that has been established on a particular subject up to the current time.

Opportunity Cost

The loss of potential gain from other alternatives when one alternative is chosen.