Asked by Olympia Thompson on Jun 12, 2024
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The contribution margin approach to the income statement:
A) can be used only by manufacturing companies.
B) shows a contribution margin rather than a net income figure at the bottom of the statement.
C) organizes costs on a functional basis.
D) is useful to managers in planning and decision making.
Contribution Margin
This measure reflects the amount of revenue per unit that exceeds the variable costs of the unit, contributing to covering fixed costs and generating profit.
Income Statement
A financial statement that shows a company's revenues and expenses over a specific period, ending with net profit or loss.
Fixed Cost
Regular, unwavering expenses in business operations that do not fluctuate with changes in production level or sales volume.
- Appreciate the function and importance of the contribution approach within income statements for making informed managerial decisions.
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Learning Objectives
- Appreciate the function and importance of the contribution approach within income statements for making informed managerial decisions.
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