Introduction
The Serious Reader Company is a company whose size and general attractiveness might not be visible to the general eye. However, the company is attractive, and it has the potential to offer significant gains. From the preparation of the four income statements, there are certain things that stand out to in this memo.
Low costs
From the first statement, this business incurs very little in terms of fixed costs. Markedly, this is an advantage to the business since one can turn the low-cost profile into a plus that will result in better profitability and increased profits. The costs of purchasing the book are also relatively low, and when one compares these costs to the price of selling, that there is a more considerable margin for the business to enjoy profits.
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Increasing price Vs. Increasing Sales Volume
From the two simulative income statements, there is difference between an increase in price and an increase in the sales volume. If one increases the price, the chances are that some customers will run away in search of cheaper options (Melnychenko, 2017) . However, one can still have a substantial increase on the net income by increasing the amount of sales volume. An increase in the sales volume has the potential to increase the revenue earnings to get from the business when compared to the rise in price. Therefore, focus more on finding ways to boost the sales volume as opposed to increasing the resale price of the books. Notably, this is the best route for the development of this business.
About Quitting your Job
Having examined the income statement as well as its projections, if there are changes in price and changes in sales volume, the business offers a sustainable income that could take care of you after quitting your job. However, you will have to be prepared to take your business through some period of change. The most crucial ingredient during this transformative period is the sales volume (Melnychenko, 2017) . In the statement, the most important things to note there are that there is an increase in stock by 1000 for every category, but the price has remained the same. From these projections, one can see that it is still possible to enjoy profits even without increasing the price.
Recommendation
It is recommended that you quit your job and focus on the full-time development of your business. As advised above, focus more on increasing your sales volume as opposed to increasing the price. Thank you.
Short Essay
There are various types of financial statements. Some of the statements are internal, while others are usually presented to the public. All these financial statements are essential to the managers of business as well as to the public since they give valuable information about the current and projected wellbeing of the organization (Umantsiv & Martyniv, 2019) . Variable costing is vital in the business in different ways other than in just the preparation of income statements (Melnychenko, 2017) . This essay is going to provide a brief discussion on internal income statements and variable costing.
Internal Income Statements
A company prepares internal income statements for internal consumption by managers. Unlike other financial statements, these statements are not presented to the public. They also do not need to conform to the financial recording procedures (Len & Glivenko, 2019 ). Internal income statements, therefore, simply act as tools to help managers calculate the financial viability of different business ventures that the business may already be undertaking or is intending to (Melnychenko, 2017) . In as much as internal income statements do not need to conform to financial recording standards, they still have to have some form of order for easy understanding by management.
Variable Costing
Variable costing is not only crucial in the preparation of income statements. Variable costing is important to managers, especially in the process of making long term strategy. Cost areas that are deemed unsustainable to the business are normally rooted out from the business via variable costing (Umantsiv & Martyniv, 2019) . Variable costing also helps managers to calculate the return on investment that they get from various ventures ( Frazer, 2016 ). Through segmenting costing, it is easier for managers to realize which areas are profitable concerning the financial investment made in these areas (Melnychenko, 2017) . Thirdly, variable costing is important since it helps managers to understand the effect of changes in the internal business environment on the overall cost profile of the business. Through variable costing, managers can easily attribute changes in the overall cost profile of a company to certain environmental factors such as changes in sales volume or changes in price.
Summary
Internal income statements are essential in business since they enable managers to have an internal understanding of the viability of business decisions that they want to make or that they have already made. Variable costing is important in business since it helps in the making of business strategy, in the calculation of return on investment and in understanding the effect of changes in the environment on the overall cost profile of a firm.
References
Frazer, L. (2016). Internal control: Is it a benefit or fad to small companies? A literature dependency perspective. Journal of Accounting and Finance , 16 (4).
Len, V., & Glivenko, V. (2019). Accounting Policies and Its Components. Accounting and Finance , (2), 26-35.
Melnychenko, I. (2017). Functions, Methods and Principles of Accounting in Improving an Enterprise's Economic Security. Accounting and Finance , (2), 50-56.
Umantsiv, H., & Martyniv, I. (2019). Accounting and Analytical Support of the Intellectual Property Objects Commercialization. Accounting and Finance , (3), 55-61.
