The Formula for a Contribution Format Income Statement Is

question 8

Multiple Choice

The formula for a contribution format income statement is

• A)Sales revenue - Step costs = Contribution margin - Fixed costs = Operating income.
• B)Sales revenue - Cost of goods sold - Discretionary costs = Operating income.
• C)Sales revenue - Discretionary costs = Gross profit - Committed costs = Operating income.
• D)Sales revenue - Variable costs = Contribution margin - Fixed costs = Operating income.

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Definitions:

Excise Tax

A tax levied on the sale of specific goods and services, such as tobacco, alcohol, and fuel.

Levied

Imposed or collected (usually a tax, fine, or other charge) by authority or force.

Price Elasticity

A measure of how much the quantity demanded of a good responds to a change in the price of that good, indicating the sensitivity of demand to price changes.

Luxury Tax

A tax imposed on expensive goods and services considered to be non-essential or luxurious.