Explaining the Individual Project

Explaining the Individual Project

Part 1: Summarize what a contribution format income statement depicts, as compared to the traditional format.


Please discuss

Explaining the Individual Project

Part 2: Using the following company data, show how the two income statement formats would look side by side.

Traditional- versus contribution-format statements are as follows:


Explaining the Individual Project

Explaining the Individual Project

Part 3: Explain why the contribution approach is more useful to project profits. As an example, show your calculations when using a projected sales increase of 20%.

Please discuss and make the following calculation


Explaining the Individual Project

Part 4: Using the following data, show how expected profits would be different if there was a sales increase of 10% and she used variable COGS of 50% vs. 60%. As an offset, this implies an increase in fixed COGS of $1,000,000.




Cost Accounting and Cost Concepts

Learning Objectives

1-Identify and give examples of each of the three basic manufacturing cost categories.

2-Distinguish between product costs and period costs and give examples of each.

3-Understand cost behavior patterns including variable costs, fixed costs, and mixed costs.

4-Analyze a mixed cost using a scattergraph plot and the high-low method.

5- Prepare income statements for a merchandising company using the traditional and contribution formats.


Learning Objective

6-Understand the differences between direct and indirect costs.

7-Understand cost classifications used in making decisions: differential costs, opportunity costs, and sunk costs.










































The Product


Direct Materials


Direct Labor


Manufacturing Overhead

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