With the contribution margin income statement, variable costs are
deducted first to determine what's left over to pay fixed costs. If the
costs are fixed, shouldn't we be ensuring that we are making enough to
cover those costs first before we concern ourselves
with the variable costs?
yes we deducted variable cost first to determine what's left over to pay fixed costs. Because we know that contribution margin income statement is an income statement in which all variable expenses are deducted from sales to arrive at a contribution margin, from which all fixed expenses are then subtracted to arrive at the net profit or loss for the period.
May 8th, 2015
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