Managerial accounting emphasizes short-term profit analysis, so the income statement is very important. Consequently, we'll examine and discuss income statements in this case
- Explain the main differences between the absorption and contribution (behavioral, variable) income statements. Will net income always be the same under the two approaches? If not, explain the difference.
- Comment specifically on why companies feel the need to create yet another income statement in a different format. What information can the company gleam from this approach which is helpful as a tool in the decision making process.
- Explain situations in which break-even analysis can be a useful tool. Provide a specific example.