Last month, Pioneer Company sold its product for $50 per unit. Fixed production costs were $20,000, and variable production costs amounted to $8.00 per unit. Fixed selling and administrative costs totaled $13,000, and variable selling and administrative costs amount to $3.00 per unit. Pioneer produced and sold 4,000 units last month.

Required:

A. Prepare a traditional income statement (down to Operating Income) for Pioneer Industries.

B. Prepare a contribution margin income statement (down to Operating Income) for Pioneer Industries.

C. Why do companies use the contribution margin income statement format?