a.) Recast the full costing income statement for 2014 into a variable costing format. Does it appear, as Sanjay Patel contends, that the more the company sells, the more it loses?
b.) Based on the previous information, calculate sales in dollars and units needed to break even in 2015.
c.) Warren Logan, CFO, has developed assumptions that he believes are reasonable for 2015 and 2016. Using these assumptions, prepare budgeted income statements for 2015 and 2016 using the variable costing method. Are the major investors likely to find forecasted profits encouraging?