Dictionary of Accounting Terms: contribution (margin) income statement
contribution (margin) income statement
income statement that organizes cost by behavior. It shows the relationship of variable costs and fixed costs, regardless of the functions a given cost item is associated with. A contribution income statement highlights the concept of Contribution Margin (CM). This format provides data that are useful for internal management. An illustrative format of the contribution margin income statement follows:
| Sales |
| Less:Variable cost of sales |
| Variable selling and administrative expenses |
| Contribution Margin (CM) |
| Less:Fixed overhead |
| Fixed selling and administrative expenses |
| Net income |
