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You are an accountant in private practice. A friend of yours, Kate, recently started a...

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Accounting

You are an accountant in private practice. A friend of yours, Kate, recently started a novelty greeting card business. Kate designs greeting cards that allow the sender to write in his or her own message. She uses a heavy card stock cut to size and decorates the front of each card with bits of fabric, lace, and ribbon in seasonal motifs. Kate hired several friends to make cards, according to Kates instructions, on a piece-work basis. (In piece work, the worker is paid on the basis of number of units produced). The workers could make the cards at their homes, meaning no factory facilities were involved. Kate designs the cards and travels around her region to sell the completed cards on consignment. For the few months the company has been in existence, the cards have been selling well, but Kate is operating at a loss. Required What types of information do you need to find the break-even point? How can the business owner use this information to make decisions? (5 marks)

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