Question

The contribution income statement specifically identifies the contribution margin within the income statement. How does forecasting at three levels assist in determining whether the organization's contribution margin on future services benefit the organization?

no numbers need to be involved u are just answering the question

Answer 1

Answer:

In a contribution margin income statement, an organization's variable costs are deducted from sales to show up at a contribution margin.

Contribution margin is basically an organization's incomes minus its variable costs, and it shows the amount of an organization's incomes or revenues are adding to its fixed expenses and net gain. When a contribution margin is resolved, an organization can subtract all applicable fixed expenses to show up at a net gain or loss for the accounting time frame being referred to.

Contribution margin income statements,by contrast, are regularly presented to directors and partners to examine the performance of individual items or item categories. Organizations can profit by contribution margin income statements since they can give more detail with respect to the expenses and assets expected to create a given item or unit of an item or product.

Notwithstanding how contribution margin is communicated, it gives critical data to administrators. Seeing how every item, good, or service adds to the company's productivity permits administraters to decision making, for example, which product lines they ought to grow or which may be discontinued. While assigning scarce resources, the contribution margin will assist them with concentrating on those products or services with the highest margin, in this manner maxmize profits.