Attached.

Running Head: Accounting

1

Students’ name
Institution Affiliation

Accounting

2
Accounting

1. Your boss read a recent magazine article about income statements, but he was
unclear about the differences between a traditional income statement and a
contribution margin income statement. Explain the difference by:
a) Presenting a sample format for each statement
While comparing a traditional and a contribution margin income statement, they provide a in
depth analysis of a business finances for a given period of time (Sharma, 2010). Both statements
show if a business has made a profit or a loss, the main difference between the two is how this
figure is arrived at. The two differ in the way costs are treated (Perčević & Hladika, 2016). While
a traditional income statement shows the income and expenses in form of cost of goods and the
operating cost, a contribution margin income statement differs in that it indicates cost as either
fixed or variable.

Traditional Income Statement
Sales Revenue

$100,000

Less: Cost of Goods Sold
Gross Profit
Less Operating expenses
Manufacturing cost
Marketing cost
Admin Expenses
Total operating costs
Net Profit

$20,000
$ 80,000
$5,000
$5,000
$10,000
$20,000
$60,000

Accounting

3

Contribution Margin Income Statement
Sales Revenue
Less: Variable Expenses
Marketing Cost
$5,000
Transport cost
$15,000
Contribution Margin
Less: Fixed Expenses
Manufacturing cost
Admin Expenses...