Problem
I. 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: i) presenting a sample format for each statement, ii) describing the focus of each statement, and iii) discussing how and by whom each statement is used.
Case Analysis
II. 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?
In 400 words:Discuss and describe the primary difference between traditional income statements and contribution margin income statements.
Discuss and describe the formula for computing the break-even point in sales dollars and units.
The response must include a reference list. Using one-inch margins, double-space, Times New Roman 12 pnt font and APA style of writing and citations.