QUESTION 1

A. Cost volume profit analysis is a technique that examines how profit change with the changes

in sales volumes, cost and selling price. Explain the assumptions that used in this analysis.

(10 marks)

B. Margin of safety is the excess of budgeted sales over the break-even volume of sales. Discuss

the significant of having margin in safety by giving an example.

(5 marks)

QUESTION 2

A. Budget provides a comprehensive financial overview of planned company operations. Discuss

with examples the key factors for budgets.

(15 marks)

B. Sales budget is the result of decisions to create conditions that will generate a desired level of

sales. Discuss at least FIVE (5) factors to consider when doing the sales forecasting.

(15 marks)