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Pitre, Inc. earned net income of $150,000 during 2010. The company wants to earn net income of $25,000 more during 2011. The company's fixed costs have been and are expected to remain at $40,000. Variable costs have also maintained stability at 20% of sales; this rate is expected to continue into 2011. Pitre, Inc. sells watches for $60 each.
a) Determine break even in dollars for 2011.
Discuss the differences between the indirect and direct methods of preparing the statement of cash flows. What do you believe are the most significant advantages and disadvantages of using each method? Explain your reasoning.
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