Question

. Prepare two contribution format income statements, one assuming that operations are not automated

Answer 1

Format of Traditional Income Statement

sales    xxxx   

(less)Cost of Goods Sold    xxxx   

Gross Profit xxxx

(less)Marketing & Administrative expenses    xxxx  

(both Fixed & Variable)  

Net Profit    xxxx

Format of contribution margin income statement

sales xxxx   

(less)Variable cost of goods sold xxxx   

Gross Contribution Margin      xxxx     

(less)Variable Marketing & Administrative expenses    xxxx

Contribution Margin    xxxx  

(less)Fixed expenses   xxxx

(both manufacturing & non manufacturing)

Net Profit xxxx