Though two approaches to income statement analysis have been used, there seems to be a trend toward
A) the full-cost approach.
B) the cost-allocation approach.
C) the contribution approach.
D) the gross-margin approach.
E) the indirect-cost approach.

Question

Quizplus · Accepted Answer

The trend in income statement analysis is toward the contribution approach, which focuses on the contribution margin (sales revenue minus variable costs) rather than the full cost of production. This approach is favored because it provides insight into the profitability of a company's products or services and allows for better decision-making regarding pricing and cost management.

Though Two Approaches to Income Statement Analysis Have Been Used