If an Income Statement Is Prepared as an Internal Report

question 33

Multiple Choice

If an income statement is prepared as an internal report, under which of the following methods would the term gross margin most likely appear

• A)Both absorption costing and variable costing.
• B)Absorption costing but not variable costing.
• C)Variable costing but not absorption costing.
• D)Neither variable costing nor absorption costing.

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Definitions:

Consumer Surplus

The difference between the maximum price a consumer is willing to pay for a good or service and the actual market price they pay.

Demand Curve

A graph showing the relationship between the price of a good and the quantity demanded by consumers, typically downward sloping.

Marginal Cost

The rise in overall expenses associated with the production of an extra unit of a good or service.

Price Discrimination

A strategy for setting prices where the same or very similar products or services are offered at different prices by the same seller in various markets.