Reference no: EM132692105

A grocery store wants to encourage its customers to bring their own shopping bags, thus saving the stroe money on purchasing plastic or paper bags and saving the environment in the process. For an Earth Day promotion, the store gives away free canvas bags and engages in a substantial advertising campaign to highlight the initiative. Then, the store rewards customers who bring their own bags with a 5% discount on all future shopping trips.

Problem a: Which of the following is not a way this initiative might be reflected in the grocery store's contribution margin income statement?

1) The stores variable cost would decrease to reflect the reduced cost of providing paper or plastic bags to all customers.

2) The store's fixed costs would increase to account for the promotional materials and the fixed costs of providing free bags to customers.

3) The store's sales revenue would decrease to reflect the discounts given to customers who bring their own bags.

4) It wouldn't be. Contribution margin income statements do not currently support sustainability accounting.