Barbara is the managerial accountant in charge of a large furniture factory’s production lines and supply chains. At that price, the homeowner would exactly break even, neither making nor losing any money. Once the break-even number of units is determined, the company then knows what sales target it needs to set in order to generate profit and reach…
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read moreThe break-even point can be affected by a number of factors, including changes in fixed and variable costs, price, and sales volume. The contribution margin represents the revenue required to cover a business’ fixed costs and contribute to its profit. Through the contribution margin calculation, a business can determine the break-even point and where it…
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read moreUnlike fixed assets, current assets are not depreciable, which means they won’t lose value over the course of time. Subsequently, current assets will be sold or moved to make a profit or take a loss, depending on the price set by the market. For investors, firms with high return on assets (ROA) ratios signify a buy and…
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read moreIf the firm is not profitable or barely profitable, you could use the income statement to help identify what changes should be made. If your chart of accounts is not set up correctly, your transactions will not balance and the records for each account could be inaccurate. Your retained earnings statement shows how owners’ equity…
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