In a traditional format income statement for a merchandising company, cost of goods sold is a variable cost that is included in the "Variable expenses" portion of the income statement. U. Traditional format income statements are widely used for preparing external financial statements. II. Although the traditional format income statement is useful for external reporting purposes, it has serious limitations when used for internal purposes because it does not distinguish between fixed and variable costs. Multiple Choice Orily statement I stove. Bot statements 1 and ill are true. Only statement il is true. Bot- stanements 11 and 111 are true