Parker Company had $5,000,000 in sales and reported a $300,000 loss in its annual report to stockholders.

Question:

Parker Company had $5,000,000 in sales and reported a $300,000 loss in its annual report to stockholders. According to a CVP analysis prepared for management’s use, $5,000,000 in sales is the break-even point for the company. Did the company’s inventory level increase, decrease, or remain unchanged? Explain.