Based on this table below write a business memo addressed to the president recommending the best course of action based on your analysis. In your memo, discuss changes in break-even points, and impacts to the operating leverage. Including a table summarizing your findings would be appropriate. The company’s long-range plan is to grow sales to 250,000 units in the next two to three years. In your memo, summarize the advantages and disadvantages of each of the alternatives. Critically evaluate the alternatives based on current market conditions and any impact each alternative may have on the long-range plan. Write a business memo addressed to the president recommending the best course of action based on your analysis. In your memo, discuss changes in break-even points, and impacts to the operating leverage. Including a table summarizing your findings would be appropriate. The company’s long-range plan is to grow sales to 250,000 units in the next two to three years. In your memo, summarize the advantages and disadvantages of each of the alternatives. Critically evaluate the alternatives based on current market conditions and any impact each alternative may have on the long-range plan. Clearly state your recommended course of action explaining why your recommendation is the best for the company. Your memo should be at least one page, but no longer than two full pages. To: Ms. Sarah Burroughs- President of Grayslake Novelty

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Based on this table below write a business memo addressed to the president recommending the best course of action based on your analysis. In your memo, discuss changes in break-even points, and impacts to the operating leverage. Including a table summarizing your findings would be appropriate. The company’s long-range plan is to grow sales to 250,000 units in the next two to three years. In your memo, summarize the advantages and disadvantages of each of the alternatives. Critically evaluate the alternatives based on current market conditions and any impact each alternative may have on the long-range plan. Write a business memo addressed to the president recommending the best course of action based on your analysis. In your memo, discuss changes in break-even points, and impacts to the operating leverage. Including a table summarizing your findings would be appropriate. The company’s long-range plan is to grow sales to 250,000 units in the next two to three years. In your memo, summarize the advantages and disadvantages of each of the alternatives. Critically evaluate the alternatives based on current market conditions and any impact each alternative may have on the long-range plan. Clearly state your recommended course of action explaining why your

recommendation is the best for the company. Your memo should be at least one page, but no longer than two full pages.

To: Ms. Sarah Burroughs- President of Grayslake Novelty
From: Analyst
RE: Analysis of Grayslake Novelty
Date: October 26, 2021
	Current Year	Alternative 1	Alternative 2	Alternative 3	Alternative 4	Alternative 5
Sales	992,000	912,640	992,000	912,640	992,000	992,000
Less: Variable Cost	545,600	545,600	505,920	505,920	416,640	595,200
Contribution Margin	446,400	367,040	486,080	406,720	575,360	396,800
Less: Fixed cost	180,000	180,000	180,000	180,000	230,000	200,000
Net operating Income	266,400	187,040	306,080	226,720	345,360	196,800
Break-Even Units	80,000	97,297	87,805	87,805	79,310	100,000
Break-Even Sales Dollars	400,000	450,000	$367,347	400,000	396,552	500,000
Margin of Safety	592,000	462,640	624,653	512,640	595,448	492,000
Margin Of Safety Ratio	60%	51%	63%	56%	60%	50%
Degree Of Operating Leverage	1.68	1.96	1.59	1.79	1.67	2.01

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