You can see the effect of the matching principle on your Capsim Core Income Statement. When you sell products, the amount you paid for the materials and labor will show up in the Variable Cost section, even though your company paid those bills earlier. The lesson is that those costs are matched to the sales.
When you buy additional capacity for your Capsim plant or add points to your automation rating, your investment in these assets will show up on the Balance Sheet under Fixed Assets as a positive number. That same amount will show up on the Cash Flow statement (as a negative number) under Cash From Investing, because the cash went out of the business for the equipment.
For this assignment, explain the relationship between your team’s Capsim decisions and their impact on the Income Statement and Balance Sheet for last week’s Round 2 competition. Share your decision-making logic. Include in your discussion how your decisions affected, a) sales, b) profit, and c) contribution margin, and explain the concepts and models you used to form and integrate your strategies.
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