The vice president for sales of Huber Corporation has received the income statement for November 19X9. The statement has been prepared on the direct cost basis and is reproduced below. The firm has just adopted a direct costing system for internal reporting purposes. kl5

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Sales Less: Variable standard cost of goods sold. Contribution margin. Less: Fixed manufacturing costs at budget. Fixed manufacturing cost spending variance Gross margin...... Less: Fixed selling and administrative costs. Net income before taxes... $2,400 1,200 $1,200 $600 0 600 $ 600 400 $ 200