Latest IMANET CMA Practice Questions BY Velasquez

Contribution margin is sales minus variable costs. Direct costing considers only variable costs as product costs, so contribution margin appears in a direct costing income statement. Absorption costing treats both variable and fixed costs as product costs Thus, variable costs are not stated separately, and contribution margin would not appear in the income statement. Accordingly, the CM is $470,000 ($1,000,000 net revenues --- $400,000 variable CGS --- $130,000 variable S&A costs).