Total Project Approach

AAA

DEFINITION of 'Total Project Approach'

A way to compare net income or contribution margin results by looking at the revenue and cost of a project. The total project approach looks at two alternative choices and compares the net income or contribution margin of the two choices.


Also referred to as comparative statement approach.

INVESTOPEDIA EXPLAINS 'Total Project Approach'

For example, a company is planning to expand production and wants to buy a new machine for this purpose. The new machine will cost $50,000 and has a life-span of five years. The machine it is replacing also has a remaining life of five years with a book value of $12,500. Being that it is a new and more efficient machine, the new purchase will reduce variable operating costs from $25,000 to $15,000 annually.

RELATED TERMS
  1. Comparative Statement

    A statement which compares financial data from different periods ...
  2. Continuation Statement

    An amendment that is attached to a borrower's financing statement ...
  3. Condensed Financials

    A summary form of a company's earnings statement, balance sheet ...
  4. Balance Sheet

    A financial statement that summarizes a company's assets, liabilities ...
  5. Cash Flow Statement

    One of the quarterly financial reports any publicly traded company ...
  6. Deferred Tax Asset

    A deferred tax asset is an asset on a company's balance sheet ...
Related Articles
  1. Competitive Advantage Counts
    Active Trading

    Competitive Advantage Counts

  2. Interpreting A Company's IPO Prospectus ...
    Fundamental Analysis

    Interpreting A Company's IPO Prospectus ...

  3. Getting To Know Business Models
    Entrepreneurship

    Getting To Know Business Models

  4. Plans The Small-Business Owner Can Establish
    Entrepreneurship

    Plans The Small-Business Owner Can Establish

comments powered by Disqus
Hot Definitions
  1. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  2. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
  3. Days Payable Outstanding - DPO

    A company's average payable period. Calculated as: ending accounts payable / (cost of sales/number of days).
  4. Net Sales

    The amount of sales generated by a company after the deduction of returns, allowances for damaged or missing goods and any ...
  5. Over The Counter

    A security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, etc. The phrase "over-the-counter" ...
  6. Earnings Before Interest After Taxes - EBIAT

    A financial measure that is an indicator of a company's operating performance. EBIAT, which is equivalent to after-tax EBIT ...
Trading Center