A Contribution Format Income Statement Allows a Manager to

question 162

Multiple Choice

A contribution format income statement allows a manager to

• A)assess the impact of product costs on net profit.
• B)assess the impact of sales volume on gross margin.
• C)assess the impact of sales volume on operating income.
• D)assess the impact of profit margin on product costs.

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Definitions:

Direct Financing Leases

A type of lease where the lessor accounts for the asset as a receivable at an amount equal to the net investment in the lease.

Sales-Type Leases

Leases where the lessor recognizes immediate profit on the sale, in addition to interest revenue over the lease term, similar to a financial purchase.

Direct Financing Lease

A type of lease arrangement where the lessor purchases the asset for the lessee and finances it, with lease payments designed to cover the cost and provide a return on investment.