Which of the following statements about contribution format income statement is incorrect?
A) It is used as an internal planning and decision making tool
B) It facilitates cost volume profit analysis
C) It separates costs into fixed and variable first deducting variable expenses from sale to obtain contribution margin
D) It emphasizes the function of production, administration and sales with no distinguish between fixed and variable costs

Question

Quizplus · Accepted Answer

This statement is incorrect as contribution format income statement distinguishes between fixed and variable costs and separates them to calculate contribution margin. It emphasizes the function of production, administration, and sales but also shows the impact of fixed costs on profitability through the calculation of contribution margin.

Which of the Following Statements About Contribution Format Income Statement