A contribution format income statement just rearranges the individual cost components and produces the same operating income as the traditional functional income statement.

Question

Quizplus · Accepted Answer

The contribution format income statement separates costs into variable and fixed categories, which helps management understand the contribution margin of each product line or service. However, the operating income calculated from the contribution format income statement will be the same as the traditional functional income statement, which groups costs by function such as manufacturing, selling, and administrative expenses.

A Contribution Format Income Statement Just Rearranges the Individual Cost