On average, a book sells for $40.00. Variable selling expenses are $3.00 per book; the
remaining selling expenses are fixed. The variable administrative expenses are 5% of sales; the
remainder of the administrative expenses are fixed.
The contribution margin for the University Store for the first quarter is:
Answer: D Level: Medium LO: 4
THE CONTRIBUTION APPROACH
A contribution format income statement is very useful in CVP analysis
since it highlights cost behavior.
EXAMPLE: Last month’s contribution income statement for Nord
Corporation, a manufacturer of exercise bicycles, follows:
Less variable expenses..