Question: Ashley thought she understood break-even analysis from Chapter 21 but then she started over-thinking it. Why did those stupid old men accountants a long time

Ashley thought she understood break-even analysis from Chapter 21 but then she started over-thinking it. Why did those stupid old men accountants a long time ago invent a way for companies to PLAN to break even? It doesnt make sense because in real life companies dont want to break even; they want to make a profit!

One of Ashley's brave classmates tried to offer an explanation but Ashley responded that we should just learn about target profit instead and it would save us all a lot of time. The classmate gave up arguing because Ashley suddenly got a mean look on her face and began angrily balling up her fists.

(1) What is target profit and how does it differ from break-even? Is Ashley on the right track at all or could she possibly benefit from the students correction? Please explain.

(2) Please also discuss margin of safety. How is it calculated and how can that information be useful to managers?

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Accounting Questions!

.def .def .def A 12 .def Br3 .def zero r4 .def oloop r17 .def iloop r18 .org $0000 [25 pts] 4- Consider the AVR assembly code in Problem # 3 with its equivalent (partially completed) address and...

Claudia thought she understood break-even analysis but then she started over-thinking it. Why did those stupid old men accountants a long time ago invent a way for companies to PLAN to break even? It...

1. Read the articleSix Impossible Things Before Breakfast. Is the Efficient Market Hypothesis (EMH) the correct theory relative well functioning financial markets? If not why not? 2.Read the...

Big dreams, arrogance, infighting, and delusion all collided in the disastrous attempt to fix venerable retail giant J.C. Penney. The inside story of a revolution derailed. WHEN YOU FIND A SAVIOR,...

Chapter Six: Understanding the Native American Experience m A lie wouldhave no sense unless the truth were felt as dangerous. AlfredAdler Managing Workplace Diversity,l Chapter Six: Understanding the...

I have asked three questions with my textbook chapter in which they come from. it would be greatly appreciated if you could help me answer these three questions. Thanks so much. :) 1. What is the...

Income Statement of an interior design firm, Grand Designs, that makes money by selling hours (fees) and by selling furniture or other items (Sale of Goods). 1) Using the formula for Profit Margin,...

Responsibility Center Presentation Imagine you have been selected by your manager to present a training session to a group of new employees. The new hires do not have accounting backgrounds and have...

ITEM #1 LEARNING FROM THE HEADLINES True to the Learning from the Headlines approach of this course, watch the Part Three Intro Video after you read the short article the video highlights. Notice...

Confirming Pages C H A P T E R 19 Analyzing Information and Writing Reports Chapter Outline Using Your Time Efficiently Analyzing Data and Information for Reports Identifying the Source of the Data...

Attached is Accounting assignment along side recommended readings to answer certain questions. Thank you Assignment 1 Problem 1 15 points Reading - W. L. Ferrara, Cost/Management Accounting: The 21st...

A compound of carbon, hydrogen, and oxygen was burned in oxygen, and 1.000 g of the compound produced 1.434 g CO2 and 0.783 g H2O. In another experiment, 0.1107 g of the compound was dissolved in...

Let A and B be 3 3 matrices with det(A) = 4, det(B) = 6 and let E be an elementary matrix of type I. Determine the value of each of the following: (a) det(1/2A) (b) det(B1AT) (c) det(EA2)

WRITE IN C AND CODE ITERATIVELY Given a dictionary of words stored in a trie rooted at root, and a string, str , consider the problem of determining the length of the longest prefix of str that is...

Teamwork. As best as possible, create and complete this scenario within your classroom or another room at your school: You are attending the fund-raiser that precedes the business meeting of the...

Convert the list prepared in Exercise 1 into a self-assessment. For each item, rate yourself on a 5- point scale, with 1 = poor and 5 = excellent. Identify two items on which you wish to improve,and...

Teamwork. Divide the class into teams with one team on each side of the classroom. One team will take the pro side of the issue and the other team will take the con side of the issue. Each team will...