Problem: In an income statement prepared using the variable costing method, fixed selling and administrative expenses would:
a) be used in the computation of the contribution margin.
b) be used in the computation of net operating income but not in the computation of the contribution margin
c) be treated the same as variable manufacturing expenses.
d) not be used
Bass Inc. has some material that originally cost $73,500. The material has a scrap value of $45,600 as is, but if reworked at a cost of $6,600, it could be sold for $58,100. What would be the incremental effect on the company's overall profit of reworking and selling the material rather than selling it as is as scrap?
a) -$22,000
b) $67,600
c) $51,500
d) $ 5,900