Which of the Following Items Would NOT Appear on an Income

question 99

Multiple Choice

Which of the following items would NOT appear on an income statement of a service organization?

• A)selling expenses
• B)cost of goods sold
• C)administrative expenses
• D)gross margin

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Definitions:

Variable Costing

A costing method that includes only variable manufacturing costs—direct materials, direct labor, and variable manufacturing overhead—in product costs.

Production Cost

The total expense incurred in manufacturing goods, including materials, labor, and overhead costs.

Variable Overhead

The costs that fluctuate with the level of production or business activity, such as utilities or materials.

Variable Costing

A pricing approach that incorporates only those production expenses that vary—such as direct materials, direct labor, and variable manufacturing overhead—into the cost of products.