A100 mgl acctg 2 slides

A100 mgl acctg 2 slides - Basic Accounting Skills Mike...

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Basic Accounting Skills A100 Mike Tiller
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A100 Managerial Accounting 2 Managerial Accounting: Contribution Margin Income Statements
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CVP Analysis is a powerful tool for decision making. It is also an easy-to-understand idea. Our goal today is to “discover” it from intuition, and then formalize it in the form of a formula.
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We start by using a new income statement format – one that is not available to people outside of a business. The new format requires that we use a cost taxonomy based on how costs behave rather than based on their traditional “business functions”.
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The contribution margin income statement looks like this: Revenues - Variable Costs =
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The contribution margin income statement looks like this: Revenues - Variable Costs = Contribution Margin
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The contribution margin income statement looks like this: Revenues - Variable Costs = Contribution Margin - Fixed Costs = Net Income
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The key to understanding it lies in the idea of a “contribution margin…”
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A100 mgl acctg 2 slides - Basic Accounting Skills Mike...

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