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:

Dividend Rate

The total dividends declared by a company over a period, usually a year, divided by the number of outstanding shares.

Preferred Shares

A class of ownership in a corporation with a fixed dividend that has priority over common stock dividends.

Participating

In finance, it often refers to securities or investments that have the potential to share in additional earnings or payouts beyond a predetermined amount.

Non-cumulative

Referring to preferred stocks or dividends that do not accumulate or carry forward unpaid dividend amounts if they are not declared in a given period.