Contribution margin income statements organize costs by behaviour rather than by function.

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Contribution margin income statements classify costs as either variable or fixed and use this information to calculate a contribution margin, which is the revenue remaining after deducting only variable costs. By organizing costs by their behavior rather than by function, the contribution margin income statement helps businesses better understand their profitability and identify opportunities for cost reduction.

Contribution Margin Income Statements Organize Costs by Behaviour Rather Than