The contribution approach to the income statement:
A) organizes costs on a functional basis.
B) is useful to managers in planning and decision making.
C) shows a contribution margin rather than a net operating income figure at the bottom of the statement.
D) can be used only by manufacturing companies.

Question

Quizplus · Accepted Answer

The contribution approach to the income statement is useful to managers in planning and decision making because it separates fixed and variable costs, allowing managers to see how changes in sales volume affect profitability.

The Contribution Approach to the Income Statement