The contribution-margin format of the income statement:
A)is used with absorption costing
B)calculates gross margin
C)distinguishes between manufacturing and nonmanufacturing costs
D)is used with variable costing

Question

Quizplus · Accepted Answer

The contribution-margin format of the income statement is used with variable costing. It focuses on the contribution margin, which is the sales revenue minus the variable expenses. It does not allocate fixed manufacturing overhead costs to units produced, unlike absorption costing, and does not distinguish between manufacturing and nonmanufacturing costs. It helps companies analyze how changes in sales volume will impact their profitability.

The Contribution-Margin Format of the Income Statement