The following data relate to Lebeaux Corporation for the year just ended: Sales revenue $ 750,000 Cost of goods sold: Variable portion 370,000 Fixed portion 110,000 Variable selling and administrative costs 50,000 Fixed selling and administrative cost 75,000 Which of the following statements is correct? A) Lebeaux's variable-costing income statement would show a gross margin of $270,000.
B) Lebeaux's variable costing income statement would show a contribution margin of $330,000.
C) Lebeaux's absorption-costing income statement would show a contribution margin of $330,000.
D) Lebeaux's absorption costing income statement would show a gross margin of $330,000.
E) Lebeaux's absorption-costing income statement would show a gross margin of $145,000.

B) Lebeaux's variable costing income statement would show a contribution margin of $330,000.

Explanation:

See below the Statements that are produced under Absorption and Variable Costing methods.

Absorption Costing

Sales revenue                                                        $750,000

Less Cost of goods sold :

Variable portion                           $370,000

Fixed portion                                  $110,000      ($480,000)

Gross Profit                                                            $270,000

Variable Costing

Sales revenue                                                                           $750,000

Less Variable Costs :

Variable portion - Cost of Sales                          $370,000

Variable selling and administrative costs            $50,000   ($420,000)

Contribution                                                                              $330,000

therefore,

The only correct statement is : Lebeaux's variable costing income statement would show a contribution margin of $330,000

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