Questions On Income Statement Assessment

1136 Words Aug 21st, 2016 5 Pages
Serious Reader Company
Trident University International
5757 Plaza Drive, Suite 100
Cypress, CA 90630
MEMO
To: Owner, Serious Reader Company
From: Gabe LeBlanc
Date: August 14, 2016
Subject: Income Statement Assessment
It has been a pleasure to be part of Serious Reader Company (SRC) and I am honored to be the one presenting you the 2015 Income Statement (IS). In compliance with your request, the Managerial accounting interpretation of the results and merely in gross margin income, statement was using Variable Costing. The cost classification is based in “all non-manufacturing categories”, direct, indirect and fixed. It includes the recommended projection on how SRC can adjust its strategies.
By looking at the 2015 statement in three (3) different segment projection, this computation analyzed profits in projecting sales at 90% books sold and 50% price increase. There is a significant profit ability using original values and information. Thus, SRC financial analysis merely fixated on the relevance and reliability of financial information utilized in each statement.
1. With the original sales information, the first income statement endows with a significant loss. The company will not be able to gain income based from this sales information. SRC is variable operating and fixed expenses makes the company to gain profits and impossible to break even. However, in some projection the profitability’s are feasible. For instance, from projection of having a 90% of the books sold.…

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