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Located below is a sample from the income statement for Walkout Ltd. Sales revenue Cost of sales Gross Profit 200,000 (110,000) 90,000 Selling expenses General
Located below is a sample from the income statement for Walkout Ltd. Sales revenue Cost of sales Gross Profit 200,000 (110,000) 90,000 Selling expenses General expenses Depreciation Salaries and wages Operating Profit (15,500) (20,000) (12,000) (7,000) 35,500 Management of Walkout Ltd is looking to gather insights into their operating leverage and the effect of changes in the volume of their output on profitability, Indicate which of the following statements is most correct by placing the number in the marked squar 3 1 2 3 4 Analysing outcomes with Cost-Volume-Profit analysis is objective because it is based on calculations are requires on subjective inputs Cost-Volume-Profit analysis can precisely be applied to external financial reporting Cost-Volume-Profit analysis provides a simple way to estimate the effects of changes in demand for goods or services on profit As Cost-Volume-Profit analysis takes account of both variable and fixed costs, it is always likely to mirror the cost-structure of the business b) Indicate which of the following statements is most correct by placing the number in the marked squar 1 2 3 4 Cost-Volume-Profit calculations are only useful for management or business employees Conceptually, Cost-Volume-Profit calculations can only be performed using fixed and linearly variable cost categories Cost-Volume-Profit calculations require the company to only produce one product Cost-Volume-Profit analysis estimates must be critiqued to ensure they stay within the relevant range Based on the financial information presented above, compute the break even volume for Walkout Ltd. Assume that sales revenue is $100 per unit and that Cost of sales is variable and all other costs are fixed costs. Enter your answer in this space Working space: d) Based on the financial information presented above, and the assumptions contained in part c), compute the volume of sales required to produce a profit after tax of $70,000. Assume tax rate of 30%. Enter your answer in this space Working space
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