Contribution Margin Income Statement: The contribution margin income statement breaks the profit calculations into contribution margin and Net operating income. The contribution margin is calculated by subtracting total variable costs from net sales revenue and net operating income is calculated by subtracting the total fixed costs from the contribution margin. Traditional Income Statement: The Traditional Income statement calculates net operating income in two steps. It calculates the gross profit by subtracting the cost of goods sold from the net sales revenue and net operating income is then calculated by subtracting the other operating costs (selling and administrative costs) from the gross profits. To indicate: The difference between the Contribution Margin Income Statement and the Traditional Income Statement

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Chapter 21, Problem 11RQ

To determine

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Contribution Margin Income Statement: The contribution margin income statement breaks the profit calculations into contribution margin and Net operating income. The contribution margin is calculated by subtracting total variable costs from net sales revenue and net operating income is calculated by subtracting the total fixed costs from the contribution margin.

Traditional Income Statement: The Traditional Income statement calculates net operating income in two steps. It calculates the gross profit by subtracting the cost of goods sold from the net sales revenue and net operating income is then calculated by subtracting the other operating costs (selling and administrative costs) from the gross profits.

To indicate: The difference between the Contribution Margin Income Statement and the Traditional Income Statement

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