Choice "C" is correct. Contribution margin is defined as net sales revenue less variable costs. Operating income equals contribution margin less fixed costs.Choice "a" is incorrect. All expenses are reported, including fixed selling and administrative expenses.Choice "d" is incorrect. The direct (variable) costing income statement reports expenses under the categories of variable and fixed. Fixed selling and administrative expenses would not be treated in the same manner as variable selling and administrative expenses.Choice "b" is incorrect. Contribution margin is defined as net sales revenue less variable costs.