Your general manager called you into his office to discuss anongoing problem. He explains that in the past, whenever he wantedto know how the projected income statement might change if salesvolume changes, it would take weeks to have the accounting department redo the entire budget. You try to hide your smile, asyou had discussed this very kind of problem in your accountingclass the prior evening. You tell him that the easy solution tothis planning problem is to change from the traditional income statement format to the contribution format income statement. Usingthe contribution format will dramatically reduce the time it willtake to do a what-if analysis (how profits may change if sales volume goes up or down from the current budget.)
Prepare a PowerPoint of 10–12 slides, including speakernotes, for your general manager and his senior management staff. Ata minimum, address these specific issues:
Explain what you would have to do to project profits using the traditional format if sales were to increase 20%.
Explain how and why it would be easier if the contributionformat were used.
Describe the steps needed to create a contribution format income statement.
Include 1 data slide and examples of a traditional format income statement and the equivalent contribution format, based onthat data.
Use charts when appropriate to make it visuallyinteresting.