A manufacturing company prepares income statements using both absorption and variable costing methods. At the end...

 

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A manufacturing company prepares income statements using both absorption and variable costing methods. At the end of a period, actual sales revenues, total gross margin, and total contribution margin approximated budgeted figures, whereas operating income was substantially below the budgeted amount. There was no beginning or ending inventories. The most likely explanation of the income shortfall is that, compared to budget, actual: sales price and variable costs had declined proportionally. sales prices had declined proportionally more than variable costs. Ofixed manufacturing costs had increased. fixed selling and administrative expenses had increased. both variable and fixed selling and administrative expenses had increased. A manufacturing company prepares income statements using both absorption and variable costing methods. At the end of a period, actual sales revenues, total gross margin, and total contribution margin approximated budgeted figures, whereas operating income was substantially below the budgeted amount. There was no beginning or ending inventories. The most likely explanation of the income shortfall is that, compared to budget, actual: sales price and variable costs had declined proportionally. sales prices had declined proportionally more than variable costs. Ofixed manufacturing costs had increased. fixed selling and administrative expenses had increased. both variable and fixed selling and administrative expenses had increased.

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Answer Fixed selling and administrative expenses had in... View the full answer