Which one of the following is true concerning a CVP income statement?
A)Costs and expenses are classified only by function.
B)It is prepared for both internal and external use.
C)It shows contribution margin instead of gross profit.
D)Costs and expenses are classified as product or period.

Question

Quizplus · Accepted Answer

A CVP (Cost-Volume-Profit) income statement focuses on the relationships between costs, volume, and profit. It specifically highlights the contribution margin, which is sales revenue minus variable costs, rather than the traditional gross profit figure (sales revenue minus cost of goods sold). This format is particularly useful for internal decision-making processes, such as understanding the impact of changes in sales volume, costs, or prices on a company's profit.

Which One of the Following Is True Concerning a CVP