Managerial accounting emphasizes short-term profit analysis, so the income statement is very important. Consequently, we’ll examine and discuss income statements in this paper.

1) 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.
2) 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.
3) Explain situations in which break-even analysis can be a useful tool. Provide a specific example.

It is important to answer the questions above. The discussion should be two pages and written in a clear and concise manner. Support your discussion with references in APA format


Attached, find production and sales information for Herrestad Company. We will use this same company for the next few papers. Keep the records.


Prepare a contribution margin (behavioral, variable) income statement for Herrestad Company, compare net operating profit from a contribution margin income statement with net income from an absorption income statement, and explain why this difference happens. Prepare a second version assuming the selling price per unit increases to $270 per unit.

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