Which of the following statements is correct?
A) The contribution margin income statement can be used for external reporting purposes.
B) The contribution margin income statement is relevant for managing a business operation.
C) If a company has a positive contribution margin, its operating income will also be positive.
D) The contribution margin equals gross profit for most all firms.

Question

Quizplus · Accepted Answer

The contribution margin income statement is a valuable tool for internal management to analyze the profitability of products or services, helping in decision-making processes related to pricing, cost control, and sales strategies. It separates variable costs from fixed costs, providing insight into how changes in sales volume affect profitability.

Which of the Following Statements Is Correct