Best Contribution Margin Income Statement Example

A contribution margin income statement is an income statement in which all variable expenses are deducted from sales to arrive at a contribution margin.

Contribution margin income statement example. The contribution margin of 225480 represents the sales revenue left over after deducting variable costs from sales 225480 600000 374520. Thus the arrangement of expenses in the income statement corresponds to the nature of the expenses. Contribution Margin Income Statement A contribution margin income statement is an income statement that shows the contribution margin as well as the net income of the entity for a given period.

This video discusses the Contribution Format Income Statement in Managerial AccountingThe Contribution Format Income Statement lists costs by their behavior. In a contribution margin income statement variable cost of goods sold is subtracted from sales revenue to obtain gross contribution margin. Continuing with the above revenue and expense data of Roberts Company the contribution margin income statement can be prepared as follows.

As a result the contribution margin for each product sold is 60 or in totality for all units is 3M having a contribution margin ratio. As the contribution concept calls for a split of all variable and fixed costs this statement also shows both these costs separately. The formula for your contribution margin is.

You can develop your companys contribution margin income statement by converting the breakeven number of units in this example 26666 to a breakeven in dollars. Calculating Your Contribution Margin Income. Net Profit Margin Net Income Revenue x 100 As you can see in the above example the difference between gross vs net is quite large.

Net Product Revenue Sales - Total Variable Costs Product Revenue For example if your product revenue was 500000 and total variable expenses were 250000 your contribution margin would be 250000 500000 or 50. The variable marketing and administrative expenses are then subtracted from gross contribution margin to obtain contribution margin. Then all fixed expenses are subtracted to arrive at the net profit or net loss for the period.

Contribution margin revenue variable costs For example if the price of your product is 20 and the unit variable cost is 4 then the unit contribution margin is. Thus the contribution margin in our example is 40 or 10000 6000 10000. A Contribution Margin Statement Form is a type of income statement wherein a businesss profitability is calculated to make projections of profitability for the next period.