1) Let's quickly move beyond the definition. Provide real life examples of how a business owner or manager can utilize it as a tool for managing a business profitably. For example, let's say you own a restaurant on Main street USA. How can this analysis help you make better decisions and improve the profitability of your business?
2) (cost volume profit CVP ) How does the breakeven point fit in this discussion? What is the breakeven point? Why is it an important concept in managerial accounting? What are its uses?
3) Good discussions regarding the discussion of the break-even point. Thinking in terms of the contribution format income statement, let's further discuss the break-even concept and how we can use the formula to answer questions such as how many units must be sold to reach a certain profit or if the sales price or quantity is increased what will be the impact on net profit?
4) Variable and absorption costing. I want to point out that in Week 1, when we discussed the traditional and contribution format income statements, that the net income for both will be the same and that the only difference is the format or categorization of expenses. The cost of goods sold will show up as one number on the traditional income statement, and two components (variable and fixed) for a manufacturing company on the contribution income statement. The total cost of goods sold, however, was still the same. This week, we are looking at two different accounting methods: variable costing and absorption costing. As you will see, we will use the traditional income statement with the absorption costing method, and the contribution format for the variable costing method. Because of the differences in these accounting methods, our net income will be different! Please keep this in mind. On that note, let's get started by discussing the differences between absorption and variable costing. I'm looking for detailed comments and discussion about these two methods.