Principles of Managerial Accounting

Principles of Managerial Accounting

1. Case Summary

Your boss read a recent magazine article about income statements, but he was unclear about the differences between a traditional income statement and a contribution margin income statement. Explain the difference by: a) presenting a sample format for each statement, b) describing the focus of each statement, and c) discussing how and by whom each statement is used.

2. Case Analysis

Lowman Inc. sells a product with a sales price of $25 per unit, variable costs of $10 per unit, and total fixed costs of $100,000. Lowman is looking into implementing an aggressive advertising campaign that will cost $45,000.

By what amount do sales dollars need to at least increase by in order for the company’s overall profits to not decrease by having the advertising campaign?

You can earn a maximum of 75 points for the entire Complete section assignment in each of the five units. The Complete section is due each Sunday at midnight. Complete responses should meet or exceed the required word count if applicable. The minimum word count will need to exceed 150 words for each question unless otherwise stated. You must show your work if the question required a numerical answer.

use the reading material as reference.

………………Answer Preview……………..

The traditional Income Statement is focused on both product costs and period costs. Product costs are those costs that are incurred during the manufacturing of a product. They could include packaging, materials costs etc. Period costs are the costs incurred in the process of selling the product such as transportation costs. Hence, the traditional…..

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