Table 10: Balance Sheet at the end of 5 years
Capstone Accountants’ Balance Sheet for year 5 shows a net worth of $751,210. This demonstrates that the net worth will grow sufficiently during the first 5 years of operation.
Break even analysis for Capstone Accountants is important because it determines how much business the firm has to have to stay in business. It is also referred to as the Cos-Volume-Profit Analysis since it incorporates the services provided and the profit to be realized thereafter. At this point, the total cost of Capstone Accountants and its total revenue earned from business operations are equal. Several aspects of Capstone Accountants must be brought into consideration while determining the break even point.in most cases, the gross margin is included to ascertain the impact of an additional service cost. For Capstone Accountants, the cost accounting department is charged with the responsibility of determining the break-even point at which the company is not incurring…show more content… The graph is usually drawn with sales being represented in quantity or revenue earned. The cost is comprehensive of both variable cost and fixed costs. For Capstone Accountants to be at break even, the variable costs of every unit of its services must be lower than its prices. This is important in ensuring that the services produce equally contribute towards covering the fixed cost of the company. Capstone Accountants should focus on services produce that its break-even point in order to make profit. However incase providing services is not possible, Capstone Accountants can consider reducing its fixed cost, reducing the variable costs or increasing the sales price of each product. These strategies will help the company to reduce its break-even point (Marchell, Ernst, & Gerald,