The contribution approach to the income statement emphasizes the distinction between ________.
A) value chain functions
B) different functional areas in a firm
C) different business segments
D) variable and fixed costs

Question

Quizplus · Accepted Answer

The contribution approach separates costs into variable and fixed, thereby emphasizing the distinction between these two types of costs. This approach helps in calculating the contribution margin, which is the difference between sales revenue and variable costs. This margin helps in determining the profitability of the firm and in making decisions related to cost structure and pricing.

The Contribution Approach to the Income Statement Emphasizes the Distinction