Channel: Edspira

Category: Education

Tags: cost volume profit analysismanagement accountingmanagerial accountingcontribution margin income statementcontribution margin income statement vs traditional formatcontribution format income statementincome statementcost accountingcontribution marginedspira

Description: In this video, we’re going to compare the traditional income statement to the contribution margin income statement. In the traditional format, costs are organized by function. This functional classification of costs is helpful for external parties. However, the traditional income statement has a glaring weakness: It doesn’t allow managers to perform cost-volume-profit analysis. To perform CVP analysis you need to know which costs are fixed and which ones are variable. The contribution margin income statement organizes costs based on their behavior. It separates selling costs into their variable and fixed components. 0:00 Introduction 0:10 Traditional income statement 1:05 Weaknesses of the traditional income statement 1:53 Contribution margin income statement 2:33 Differences between traditional and contribution margin income statements — Edspira is the creation of Michael McLaughlin, an award-winning professor who went from teenage homelessness to a PhD. Edspira’s mission is to make a high-quality business education accessible to all people. — SUBSCRIBE FOR A FREE 53-PAGE GUIDE TO THE FINANCIAL STATEMENTS, PLUS: • A 23-PAGE GUIDE TO MANAGERIAL ACCOUNTING • A 44-PAGE GUIDE TO U.S. TAXATION • A 75-PAGE GUIDE TO FINANCIAL STATEMENT ANALYSIS • MANY MORE FREE PDF GUIDES * eepurl.com/dIaa5z — GET CERTIFIED IN FINANCIAL STATEMENT ANALYSIS, IFRS 16, AND ASSET-LIABILITY MANAGEMENT * edspira.thinkific.com — LISTEN TO THE SCHEME PODCAST * Apple Podcasts: podcasts.apple.com/us/podcast/scheme/id1522352725 * Spotify: open.spotify.com/show/4WaNTqVFxISHlgcSWNT1kc * Website: edspira.com/podcast-2 — GET TAX TIPS ON TIKTOK * tiktok.com/@prof_mclaughlin — ACCESS INDEX OF VIDEOS * edspira.com/index — CONNECT WITH EDSPIRA * Facebook: facebook.com/Edspira * Instagram: instagram.com/edspiradotcom * LinkedIn: linkedin.com/company/edspira — CONNECT WITH MICHAEL * Twitter: twitter.com/Prof_McLaughlin * LinkedIn: linkedin.com/in/prof-michael-mclaughlin — ABOUT EDSPIRA AND ITS CREATOR * edspira.com/about