Comparative income statements for Gregson Inc. are as follows:
Required:
The president and management believe that the company performed better in 2014 than it did in 2013. Write the president's letter to be included in the 2014 annual report. Explain why the company is financially sound and why shareholders should not be alarmed by the $120,000 loss in a year when gross profit increased significantly.
Definitions:
Break-even
The point at which total costs and total revenues are equal, resulting in no net loss or gain.
Sales Dollars
The total revenue generated from the sale of goods or services, measured in dollar amount.
Common Fixed Expenses
Expenses that remain constant in total regardless of changes in the level of activity or volume of output.
Break-even
The point at which total cost and total revenue are equal, meaning there is no net loss or gain.
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