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Jonathan & Pam Reedus' business, "Reedus Clothing Mart" reported the financial information below for the month of July in 2012: Sales Revenue............................................................$ 420,000 Cost of goods sold (variable) ............................................ 168,000 Sales and commissions (variable..................................... 107,000 Shipping expenses (variable).......................................... 44,000 Advertising expense (fixed)............................................. 70,000 Insurance expense (fixed)................................................ 9,000 Depreciation expense (fixed).......................................... 42,000
Required: [A] Prepare an income statement using the contribution format. [B] From a management perspective, what does the contribution format reveal to the Reeduses that the traditional format may not directly emphasize? Be thorough and specific.
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