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The Contribution Format

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The contribution margin format of the

income statement emphasizes cost behavior.
Total Unit
Sales Revenue $ 100,000 $ 50
Less: Variable costs 60,000 30
Contribution margin $ 40,000 $ 20
Less: Fixed costs 30,000
Net income $ 10,000
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Contribution Margin
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 Contribution margin is the amount

remaining after variable expenses are
deducted from sales.
 Contribution margin contributes
toward covering fixed expenses and
then toward profits for the period.
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The Contribution Format

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Used primarily for Used primarily by

external reporting. management.