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  • Tugasan Bab 5

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    The document compares a traditional income statement approach and a contribution approach. In the traditional approach, costs are organized by function with categories for cost of goods sold, gross margin, and selling/administrative expenses. In the contribution approach, costs are organized by behavior with variable expenses deducted first to determine contribution margin, then fixed expenses are deducted to determine net operating income. Both approaches result in the same net operating income of $1,000 for the example provided.

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    The document compares a traditional income statement approach and a contribution approach. In the traditional approach, costs are organized by function with categories for cost of goods sold, gross margin, and selling/administrative expenses. In the contribution approach, costs are organized by behavior with variable expenses deducted first to determine contribution margin, then fixed expenses are deducted to determine net operating income. Both approaches result in the same net operating income of $1,000 for the example provided.

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    10 views1 page

    Tugasan Bab 5

    Uploaded by

    durattul_syida
    The document compares a traditional income statement approach and a contribution approach. In the traditional approach, costs are organized by function with categories for cost of goods sold, gross margin, and selling/administrative expenses. In the contribution approach, costs are organized by behavior with variable expenses deducted first to determine contribution margin, then fixed expenses are deducted to determine net operating income. Both approaches result in the same net operating income of $1,000 for the example provided.

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    Attribution Non-Commercial (BY-NC)
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    Tugasan bab 5(MA)

    Question 5-14 What is the difference between a contribution approach income statement and a
    traditional approach income statement?

    Traditional Approach(costs organized by function)

    Sales 12,000

    Cost of good sold 6,000

    Gross margin 6,000

    Selling and administrative expenses:

    selling 3,100

    administrative 1,900 5,000

    Net operating income $1,000

    Contribution Approach (costorganized by behavior)

    Sales 12,000

    Variable expensese:

    variable expenses 2,000

    variable selling 600

    variable administrative 400 3,000

    Contribution margin 9,000

    Fixed expenses:

    fixed production 4,000

    fixed selling 2,500

    fixed administrative 1,500 8,000

    Net operating income $ 1,000

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