SpringSong is a medium-sized manufacturer of squirrel-proof bird feeders. Your father, the plant manager, helped you get a summer internship working for SpringSong's CFO. Your father has told you that the company is struggling and that he is worried about his job. With a breakeven point at 80% of capacity, the company has barely been breaking even. As the CFO's assistant, you are attending a meeting with President Gail Ayala, Vice- President of Marketing Warren Thrasher, and CFO Shane Corwin. "I've decided to go forward with selling on our Web site," the president announces excit- edly. "We can manage the cost of setting up the Web site." "Great," responds Thrasher. "Web sales will give us a national market. Even at our cur- rent sale price. I'm sure we can increase our sales threefold." Corwin shows a CVP chart he has prepared and points to the operating income area. "Given our contribution margin ratio, these higher sales will mean no more sweating our quarterly income figures. The sky's the limit!" Looking at the CVP chart, you recall studying CVP analysis and the importance of its assumptions. If SpringSong is operating at about 80% of capacity, you cannot see how a threefold increase in production can be in the relevant range. You wonder if you should raise the issue now or check your accounting textbook and make sure of the facts first. You are also reluctant to dampen the group's enthusiasm and good spirits. Required 1. Should you raise the question of CVP analysis' assumptions during the meeting, after- ward with the CFO when you have had time to do some research, or not at all? Explain. 2. The CFO asks you to draft a report explaining the role of the relevant range in CVP analy- sis. Address the report to President Gail Ayala. and use the memo format outlined in Daily Exercise 22-5.