You had a total loss of 59000 from those two categories of books. Although your income statement is showing a higher number of book sales in Category D and E, it is costing you more to purchase the books vs. selling them. 90 % Sold The second page of your income statement shows results with a little manipulation. Using the same numbers from your original statement, I am able to show you what your income would look like if 90% of all you book were sold. As you can see you profit would increase tremendously. You’ll experience a $36,900 profit increase by just increasing the sales. 0% Markup Lastly, the final page of your income statement shows what your profits would be if you did a 50% markup from you original sales prices. This is where you can maximize your profits. Based on your original numbers, you will clear $99900. If you mark up your prices, your D and E categories that were hindering you initially would have you soaring. Recommendation My recommendation for maximum profit would be to mark your prices up 50%. This would be your best bet if you would like to quit your other job and urn this into a full time business.
However, you must note thou would have more time to travel so your travel expenses would definitely rise. Also take in consideration that your other fixed expenses will rise once you start doing the job full time. Please let me know if you have any questions. Best, Senior Accountant Why do many organizations make the effort to prepare a different type of income statement for Internal purposes? Think the biggest reason organizations prepare different income statements is the simple fact that it is internal.
As long as the statement stays internal, the company can not only see where they are financially, however, they can play with the numbers of the company and see where they could be if they tried something a little different. An internal statement does not follow the rules and guidelines established by the Financial Accounting Standards Board of the American Institute of Certified Public Accountants (Leister, n. D), therefore it can things like changes in operating income, cost, assets and profits levels, before the company gives the info to shareholder and the
Outside public. Variable costing is not just about preparing income statements. Provide at least three scenarios in which understanding how cost behavior is useful. 1 . (Break Even sales volume) A new company is about to open. The company owners should know how much revenue it is going to take to recoup the fixed cost of the company. The break even sales volume must be met before making a profit. 2. (Sales volume to recover a loss) Many companies do not make profit during their first year of operating. In this case the company made a loss in profits.
Being able to calculate the sales volume to recover the loss will let the owners know what how much extra revenue they will need to make up for that loss. 3. (Sales volume for a profit) The same concept is used here just as calculating for break even sales. However this time the business owners are predicting how much revenue it would take to not only break even, but also how much revenue it takes to gain a certain profit.