Flavol Corporation reported sales revenues of $1,850,000 for the period just ended. Cost of goods sold, selling expenses, and administrative expenses totaled $1,200,000, $280,000, and $170,000, respectively. A detailed analysis of the latter three amounts revealed respective fixed cost components of $780,000, $60,000, and $130,000.
A. Determine the amounts, if any, that Flavol would report on a traditional income statement for (1) gross margin, (2) contribution margin, and (3) income.
B. Determine the amounts, if any, that Flavol would report on a contribution income statement for (1) gross margin, (2) contribution margin, and (3) income.
C. Which of the two income statements (traditional or contribution) is more useful for studying a company's cost-volume-profit relationships?

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The Answer of Flavol Corporation reported sales revenues of $1,850,000 for the period just ended. Cost of goods sold, selling expenses, and administrative expenses totaled $1,200,000, $280,000, and $170,000, respectively. A detailed analysis of the latter three amounts revealed respective fixed cost components of $780,000, $60,000, and $130,000.
A. Determine the amounts, if any, that Flavol would report on a traditional income statement for (1) gross margin, (2) contribution margin, and (3) income.
B. Determine the amounts, if any, that Flavol would report on a contribution income statement for (1) gross margin, (2) contribution margin, and (3) income.
C. Which of the two income statements (traditional or contribution) is more useful for studying a company's cost-volume-profit relationships?

Flavol Corporation Reported Sales Revenues of $1,850,000 for the Period