A contribution-margin income statement shows:
A) the contribution of each department to both fixed costs and profit.
B) the effect of a marketing strategy on sales in different areas.
C) the marginal costs for producing each new unit of a product.
D) the effect of competitors' prices on the profits of a company.
E) the contribution of external market factors to the profits or losses of the company.

Question

Quizplus · Accepted Answer

A contribution-margin income statement shows the contribution of each department to both fixed costs and profit. It helps in identifying the departments that are contributing more to the profit and those that are not performing well. This information can be used to take necessary actions such as optimizing production in profitable departments and cutting down costs in unprofitable ones.

A Contribution-Margin Income Statement Shows