Multiple choice questions:

1) A (n) ________ groups cost by behavior; that is costs are classified as either variable costs or fixed costs.

A) balance sheet

B) Contribution margin income statement

C) Traditional income statement

D) Absorption costing income statement

2) Contribution margin ratio is equal to:

A) Fixed costs divided by contribution margin per unit.

B) Net sales revenue per unit minus variable costs per unit.

C) Net sales revenue minus variable costs.

D) Contribution margin divided by net sales revenue.

3) Which of the following appears as a line item in a contribution margin income statement?

A) Gross profit

B) Cost of goods sold

C) Operating income

D) Selling and administrative expenses