Question

Which of the following statements about contribution income statement is NOT correct? 1. It is used...

Which of the following statements about contribution income statement is NOT correct?

1. It is used as an internal planning and decision-making tool

2. It facilitates cost volume profit analysis

3. It separates costs into fixed and variable components, first deducting variable expenses from sale to obtain contribution margin

4. It emphasizes the function of production, administration and sales with no distinction between fixed costs and variable costs

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Contribution income statement is a statement which separates the fixed and variable component where by the variable expenses are deducted from sales to obtain contribution margin..

Also this statement is used as an internal planning and decision-making tool in order to to assess what is the margin the product is giving. moreover it also facilitates in cost volume profit analysis as it distinguish between variable cost and fixed cost.

However it do not emphasizes on production and adminstration and also it distinguish between the fixed cost as well as variable cost. Therefore this option is not correct about contribution income statement.

Therefore the correct option is 4th.

If you find the answer helpful please upvote.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Mastery Problem: CVP and the Contribution Margin Income Statement For planning and control purposes, managers have...
Mastery Problem: CVP and the Contribution Margin Income Statement For planning and control purposes, managers have a powerful tool known as cost-volume-profit (CVP) analysis. CVP shows how revenues, expenses, and profits behave as volume changes. In CVP analysis, costs are classified according to behavior: variable or fixed. Costs are classified by behavior on the income statement in CVP analysis to arrive at operating income. This format is known as the contribution margin income statement. Complete the following table to illustrate...
Which of the following is not true about the contribution margin format income statement A) the...
Which of the following is not true about the contribution margin format income statement A) the costing method used is referred to as variable costing B) contribution margin equals total sales less total variable costs C) total fixed costs include some selling and admin costs D) net income equals contribution margin less total fixed costs E) variable costs do not include sales commissions
1. Which of the following is correct about a company’s contribution margin ratio? a) The smaller...
1. Which of the following is correct about a company’s contribution margin ratio? a) The smaller the ratio, the smaller the total level of sales required to cover fixed expenses. b) Two companies with the same margin of safety in dollars will always have the same contribution margin ratio. c) The contribution margin decreases if the variable expense per unit decreases if all other factors remain unchanged. d) In two companies making the same product with the same sales and...
1-4 Oslo Company prepared the following contribution format income statement based on a sales volume of...
1-4 Oslo Company prepared the following contribution format income statement based on a sales volume of 1,000 units (the relevant range of production is 500 units to 1,500 units): Sales $ 25,000 Variable expenses 17,500 Contribution margin 7,500 Fixed expenses 4,200 Net operating income $ 3,300 What is the contribution margin per unit? What is the contribution margin ratio? What is the variable expense ratio? f sales increase to 1,001 units, what would be the increase in net operating income?
Which of the following is the income statement formula for the variable costing method? Sales Revenue...
Which of the following is the income statement formula for the variable costing method? Sales Revenue - All Variable Costs = Contribution Margin - All Fixed Expenses = Operating Income Sales Revenue - Cost of Goods Sold = Gross Margin - All Fixed Expenses = Operating Income Sales Revenue - Variable Manufacturing Costs = Contribution Margin - Fixed Manufacturing Costs = Operating Income Sales Revenue - Cost of Goods Sold = Gross Margin - Selling and Administrative Expenses = Operating...
Chapter 5 Cost-Volume-Profit Relationships What is the Contribution income statement? __________________________ __________________________ __________________________ __________________________ __________________________ What...
Chapter 5 Cost-Volume-Profit Relationships What is the Contribution income statement? __________________________ __________________________ __________________________ __________________________ __________________________ What is the gross profit ratio?_____________________________________________ What is the contribution margin ratio?______________________________________ What is the break-even point?_____________________________________________ Give 3 ways of stating breakeven: (relating items from the contribution income statement) _____________________________ _____________________________ _____________________________ What is the formula to find the breakeven number of units?____________________________ How can you determine the number of units necessary to attain a certain level of profit? _____________________________________________________________________________ How can you determine...
Give a numerical example for Variable Costing Contribution Format Income Statement that is used for the...
Give a numerical example for Variable Costing Contribution Format Income Statement that is used for the internal decision-making and compare with the traditional income statement prepared by absorption costing that is used for the external reporting. Prepare the two income statements assuming the following 1- There is no inventory. 2- There is beginning inventory. 3- There is end of period inventory 4- Explain and comment on the reasons for differences in the results
Oslo Company prepared the following contribution format income statement based on a sales volume of 1,000...
Oslo Company prepared the following contribution format income statement based on a sales volume of 1,000 units (the relevant range of production is 500 units to 1,500 units):      Sales $ 23,900       Variable expenses 13,300       Contribution margin 10,600       Fixed expenses 7,632       Net operating income $ 2,968         Required: What is the degree of operating leverage Oslo Company prepared the following contribution format income statement based on a sales volume of 1,000 units (the relevant range...
Oslo Company prepared the following contribution format income statement based on a sales volume of 1,000...
Oslo Company prepared the following contribution format income statement based on a sales volume of 1,000 units (the relevant range of production is 500 units to 1,500 units): Sales $ 70,000 Variable expenses 38,500 Contribution margin 31,500 Fixed expenses 23,310 Net operating income $ 8,190 What is the break-even point in dollar sales? . How many units must be sold to achieve a target profit of $18,900? What is the margin of safety in dollars? What is the margin of...
Oslo Company prepared the following contribution format income statement based on a sales volume of 1,000...
Oslo Company prepared the following contribution format income statement based on a sales volume of 1,000 units (the relevant range of production is 500 units to 1,500 units): Sales $ 75,000 Variable expenses 45,000 Contribution margin 30,000 Fixed expenses 22,800 Net operating income $ 7,200 9.What is the break-even point in dollar sales? 10. How many units must be sold to achieve a target profit of $18,000? 11. What is the margin of safety in dollars? What is the margin...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT