. Consider the following statements about absorption costing and variable costing:

I. Variable costing is consistent with contribution reporting and cost-volume-profit analysis. II. Variable costing must be used for external financial reporting. III. A number of companies use both absorption costing and variable costing. Which of the above statements is (are) true?

A. I only.

B. II only.

C. III only.

D. I and II.

E. I and III.

For external-reporting purposes, generally accepted accounting principles require that net income be based on:

A. absorption costing.

B. variable costing.

C. direct costing.

D. semivariable costing.

E. activity-based costing.