John continued, heres some information I need you to help make sense of. He then handed you some information as shown in Appendix A. Can you put them into a format that I can actually understand and make sense of? Everyone is giving me all these numbers but I have no idea what they mean! I know what an income statement is, but I think most of these dont even appear in there. If so, what do these numbers do and why do I need them? I hear terms like direct cost, indirect costs, fixed costs, variable costs, product cost, period costs and many others. Is it necessary to use so many names? Isnt it simpler to just say Revenue minus all Costs equals profit? Then I can just do it myself and prepare my own income statement and balance sheet.

Question

The explanation of the various types of costs and when to use them. Please use your own words.300-500 words.