A contribution format income statement presents all costs
A)By behavior rather than by function.
B)By function rather than behavior.
C)By cost classification rather than by behavior.
D)None of these ans choices are correct.

Question

Quizplus · Accepted Answer

A contribution format income statement presents costs by behavior, meaning that they are classified as either variable or fixed costs. This allows for a better understanding of the cost structure of a business and how changes in sales volume affect profitability. Option B is incorrect as a traditional format income statement presents costs by function such as cost of goods sold, selling and administrative expenses, and interest expense. Option C is also incorrect as cost classification refers to the categorization of costs as direct or indirect, controllable or uncontrollable, etc., and is not directly related to how costs are presented on an income statement. Option D is incorrect as there is a correct answer for this question.

A Contribution Format Income Statement Presents All Costs