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Learning Objective 05-C2: Describe several applications of cost-volume-profit analysis.

Cost-volume-profit analysis can be used to predict what can happen under alternative strategies concerning sales volume, selling prices, variable costs, or fixed costs. Applications include what-if analysis, computing sales for a target income, and break-even analysis.

Computing Income from Sales and Costs

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Knowledge Check 01 After-tax income for Square Company is $10,000. Square Company pays 20% in taxes.