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. Balance Sheet

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

    One of the quarterly financial reports any publicly traded company ...
  5. Condensed Financials

    A summary form of a company's earnings statement, balance sheet ...
  6. Insurance Regulatory Information ...

    A collection of databases and tools used to analyze the financial ...
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

Hot Definitions
  1. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  2. Leading Indicator

    A measurable economic factor that changes before the economy starts to follow a particular pattern or trend. Leading indicators ...
  3. Wage-Price Spiral

    A macroeconomic theory to explain the cause-and-effect relationship between rising wages and rising prices, or inflation. ...
  4. Accelerated Depreciation

    Any method of depreciation used for accounting or income tax purposes that allows greater deductions in the earlier years ...
  5. Call Risk

    The risk, faced by a holder of a callable bond, that a bond issuer will take advantage of the callable bond feature and redeem ...
  6. Parity Price

    When the price of an asset is directly linked to another price. Examples of parity price are: 1. Convertibles - the price ...
Trading Center