Lesson Plan

• Describe the principle and formula of contribution (variable) costing.
• Identify situations where contribution costing is appropriate for short‑term decision making.
• Explain why contribution costing is unsuitable for external reporting and long‑term strategic planning.
• Compare contribution costing with absorption costing in terms of cost classification and profit measurement.
• Apply contribution costing to a simple numerical example to calculate contribution per unit and profit.

• Projector and screen
• PowerPoint slides summarising contribution vs absorption costing
• Printed handouts with the comparison table and example problem
• Calculators and worksheet for numerical practice
• Sticky notes for the Do‑Now activity
• Exit‑ticket slips

Begin with a quick poll: “When you set a price for a new product, what costs do you think matter most?” Students recall previous lessons on fixed versus variable costs. Today they will determine when contribution costing is the right tool and be able to justify its use or rejection in specific business scenarios.

1. Do‑Now (5’): Students write examples of variable and fixed costs on sticky notes and place them on the board.
2. Mini‑lecture (10’): Explain contribution costing formula and key features using slides.
3. Guided analysis (12’): Discuss situations where contribution costing is used; fill a class chart of short‑term decisions.
4. Contrast activity (10’): In pairs, compare contribution vs absorption costing using the provided table; list pros and cons.
5. Numerical practice (12’): Work through the practical example; calculate contribution per unit, total contribution, and profit; check answers.
6. Decision‑making scenario (8’): Small groups evaluate a special‑order case and decide which costing method to apply; present reasoning.
7. Check for understanding (3’): Quick exit‑ticket with two short questions on appropriate use of each costing method.

Summarise that contribution costing is ideal for short‑term, volume‑driven decisions but must be replaced by absorption costing for statutory reporting and long‑term planning. Students complete an exit ticket stating one situation for each method. For homework, they answer a set of CVP questions that require using contribution costing to inform pricing decisions.