7. When the variable costing method is used, fixed factory overhead appears on the income statement asa A) component of cost of goods sold B) component of cost of goods sold and production volume variance C) production volume variance D) fixed expense Answer: 8. A) Absorption costing B) Variable costing C) Direct costing D) The contribution margin approach Answer: is used for external reporting. 9. In determining product costs, variable costing and absorption costing differ in the treatment of A) variable overhead costs B) variable selling costs C) fixed selling costs D) fixed overhead costs Answer: 10. The variable-costing income statement separates costs into fixed costs and variable costs. A) TRUE B) FALSE Answer 11. Gross margin is a subtotal on a variable-cost A) TRUE ing income statement. B) FALSE