The amount of income presented on a contribution format income statement
A)will always be greater than that shown on a traditional GAAP income statement.
B)will always be less than that shown on a traditional GAAP income statement.
C)will always be the same as that shown on a traditional GAAP income statement.
D)may or may not differ from that shown on a traditional GAAP income statement depending on the level of production and sales.

Question

Quizplus · Accepted Answer

The amount of income presented on a contribution format income statement may or may not differ from that shown on a traditional GAAP income statement depending on the level of production and sales. This is because the contribution format income statement separates costs into fixed and variable costs, and therefore, the income presentation can be affected by changes in production and sales volumes. Traditional GAAP income statements, on the other hand, do not separate costs in this manner.

The Amount of Income Presented on a Contribution Format Income