Lesson Plan

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Lesson Plan
Grade: Date: 17/01/2026
Subject: Business
Lesson Topic: the limitations of contribution costing
Learning Objective/s:
  • Describe the key features of contribution (marginal) costing.
  • Explain at least five limitations of contribution costing in managerial decision‑making.
  • Compare contribution costing with absorption costing and identify situations where each is appropriate.
  • Apply contribution analysis to short‑term pricing or special‑order decisions while recognising its constraints.
Materials Needed:
  • Projector and screen
  • Whiteboard and markers
  • Printed handout summarising contribution vs absorption costing
  • Calculator worksheets for contribution margin calculations
  • Sample product data sheets for a short‑run pricing exercise
 Introduction:
Begin with a quick poll: “When you set a price, what costs do you think about first?” Link to prior knowledge of variable and fixed costs from earlier lessons. Explain that today’s success criteria are to identify the main limitations of contribution costing and know when to supplement it with absorption costing.
Lesson Structure:
  1. Do‑Now (5’) – Short quiz on variable vs fixed costs projected on the board; teacher checks answers.
  2. Recap of contribution costing (7’) – Brief reminder of the contribution margin formula using the projector.
  3. Exploration of limitations (15’) – In pairs, students read each limitation from the handout, discuss real‑world examples, and record a brief note.
  4. Comparison activity (10’) – Whole‑class Venn diagram contrasting contribution and absorption costing on the whiteboard.
  5. Application exercise (12’) – Worksheet: calculate contribution margin for a special order and then evaluate the result using at least two identified limitations.
  6. Check for understanding (5’) – Exit ticket: write one limitation that would prevent using contribution costing for a long‑term investment decision.
  7. Summary & homework preview (3’) – Teacher highlights key take‑aways and assigns a short reflective paragraph.
Conclusion:
Summarise that contribution costing is valuable for short‑run analysis but its limitations require complementary use of absorption costing for external reporting and strategic planning. Students complete an exit ticket stating one situation where contribution costing alone would be misleading. For homework, they research a real‑company case where both costing methods were applied.