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Contributiion income statement

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Why is the Contribution Income Statement very useful in a CVP analysis?

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Solution Summary

This solution discusses why the contribution income statement is useful in a CVP analysis.

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The cost-volume-profit (CVP) is a "tool that helps managers understand the relationships among cost, volume, and profit" (Brewer, Garrison & Noreen, 2007, p. 240). Cost-volume-profit (CVP) analysis is concerned with the effects on net operating income of:

1. Selling prices
2. Sales volume
3. Unit variable costs
4. Total fixed costs
5. The mix of products sold.

The CVP ...

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Edwin Sinclar, MBA
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  • Bachelor of Science , Berea College
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