Crossroads Tavern is a short two part exercise on break-even analysis. In the first part, the owner and manager are attempting to assess the level of sales (measured in units and dollars) required for the firm to: (a) achieve a profit of zero; (b) achieve a target profit of $30,000; and (c) achieve a net cash flow of zero. In the second part, the manager is evaluating the idea of expanding the hours of operation, and is attempting to determine the .....more

Disc Importers is a classical record importer and wholesaler which has just completed its first year of operations. The controller has asked other executives for assistance in choosing an inventory valuation method. The choices revolve around the four standard inventory valuation options (LIFO/FIFO/average cost/specific identification), and the uses which the executives wish to make of the financial statement information. As well, the controller wants .....more

This note discusses cost behaviour, break-even analysis contribution and projected income statements. In addition to the theoretical framework, two examples are presented and analyzed.