Got a tricky question? Receive an answer from students like you! Try us!

Consider the following scenario - Research Paper Example

Only on StudentShare
Research Paper
Finance & Accounting
Pages 1 (251 words)


This figure was calculated by subtracting variable costs from the sales price. A high contribution margin is a positive indicator of profitability. The contribution margin is used to cover the fixed expenses of the company.

Extract of sample
Consider the following scenario

The net income of the company during the year was $112,000. A firm’s net income reflects how much profit the company generated during a period of twelve months. The gross profit of the organization was $232,000. Gross profit is a broad measure of profitability.
The new breakeven point is 10,893 units. The changes in the compensation system increased the variable costs of the company. The end result was that the company had a higher breakeven point than with the old compensation system. A higher breakeven point is an undesirable ...
Download paper
Not exactly what you need?

Related Essays

Describe and consider the lessons for auditors and regulators from Enron fraud
It seems that even a well structured audit programme may fail to provide desired outcomes unless the whole audit team pays special attention to each and every phase of the audit process. The past decade witnessed a series of corporate scandals including Lernout & Hauspie, Arthur Anderson, Enron, WorldCom, Parmalat, Peregrine Systems, Rite Aid, and Subsequent investigations have…
12 pages (3012 words)
Describe and Consider Lessons for Auditors and Regulators from the WorldCom Fraud
The fraud was undertaken by representing line costs as capital, rather than expenses and inflating revenue on the financial statements. However, a team of internal auditors later on came to discover the fraudulent representation of financial statements and notified the Company’s board of directors and audit committee, who acted swiftly although the company had already become bankrupt (Albrecht,…
12 pages (3012 words)
Happy Hospital Scenario
The budget can be considered a comprehensive short term plan of the future of a company and the actions that are needed to implement the plan. The use of budgeting has many advantages. Budgeting can be used as a means of communicating management’s plans throughout an organization (Garrison & Noreen, 2002). A set of financial reports that are very useful for the stakeholders of an organization…
3 pages (753 words)
The international economic scenario
The accounting requirement for businesses has also changed due to this change. Demands of stakeholders have changed when it comes to information. This is because stakeholders are also becoming global. Single investors holds portfolio of investments in many different regions of the world. Similarly companies invest in many different nations, thus the demand for accounting regulations has totally…
Required: critically evaluate the following statement: Accounting regulation is at a crossroads : many believe that we need a
109). Also, companies operating in a certain country experienced difficulties while comparing their financial performance with foreign companies in the same industry. Consequently, users, preparers and regulators of financial reports recognized the need to develop a universal accounting regulation, which will ensure a universal disclosure framework (McEwen 2009, p. 110). This paper seeks to…
5 pages (1255 words)
ABC at Scotty Accents Company
This has been proven in the case of Scotty Accents where one costing system - absorption costing indicates that the production of Brass was not as profitable as Chrome while the other – activity based costing (ABC) indicates that it is the other way around. Therefore, different costing methods provide different results and can lead to different decisions being taken in terms of pricing and…
6 pages (1506 words)