Question

The difference between a traditional format income statement and a contribution format income statement is:_______.
a. that the traditional format organizes costs into cost of goods sold and selling and administrative expenses, while the contribution format organizes costs into variable and fixed costs.
b. that the traditional format organizes costs for internal use only, while the contribution format organizes costs for stockholders and creditors.
c. that the traditional format calculates gross margin which is equal to cost of goods sold minus fixed costs, while the contribution format calculates contribution margin which is cost of goods sold minus variable costs.
d. that the traditional format organizes costs by cost behavior, while the contribution format organizes costs by function.

Answer 1

Answer:

(a) that the traditional format organised cost into cost of goods sold and selling and administrative expenses while contribution format organizes cost into variables and fixed cost