On the absorption costing income statement, deduction of the cost of goods sold from sales yields contribution margin.

Absorption Costing Income Statement

An income statement format that includes all manufacturing costs (both fixed and variable) in the calculation of the cost of goods sold.

Cost of Goods Sold

The direct costs attributable to the production of the goods sold by a company, including material and labor expenses.

Contribution Margin

The difference between the sales revenue of a product and the variable costs associated with producing it, used to cover fixed costs and contribute to profit.