A contribution income statement is probably the most effective tool for measuring performance in a cost center

Question

Quizplus · Accepted Answer

A contribution income statement is more suited for measuring performance in profit centers, not cost centers, because it separates variable and fixed costs to highlight the contribution margin, which is relevant for assessing profitability, not just cost control. Cost centers focus on minimizing costs rather than generating profits.

A Contribution Income Statement Is Probably the Most Effective Tool