Overview

contribution income statement


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The presentation of an income statement or profit and loss account using the marginal costing layout. In such a treatment the fixed costs are not charged to the individual products produced (as in absorption costing) but are treated as a deduction from the total contribution of all the products.

EXAMPLE

A company manufactures two products, A and B. The simplified contribution income statement below shows the combined contribution of these products, from which total fixed costs can be deducted to show total profit.

Product A

Product B

Total

Sales revenue

2000

5000

7000

Variable costs

1400

2900

4300

Contribution

600

2100

2700

Total fixed costs

1200

Total profit

1500

Subjects: Accounting.


Reference entries

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